Samsung Electronics and SK Hynix are upgrading their manufacturing facilities in China to produce more advanced memory chips, according to four people familiar with the plans. The South Korean companies aim to address growing demand for artificial intelligence components and compete with Yangtze Memory Technologies Co. (YMTC), a Chinese rival that has recently gained market share. Both firms confirmed they are installing new equipment in consultation with the U.S. government to ensure compliance with export regulations.
The upgrades follow a period of regulatory uncertainty regarding U.S. export controls on chip-making equipment. While the South Korean firms previously operated under exemptions, the U.S. government transitioned to an annual license system for 2026. In 2025, the U.S. Commerce Department's Bureau of Industry and Security stated it did not intend to grant licenses for technology upgrades or capacity expansions at foreign-owned factories in China, though Samsung and SK Hynix reported that their current activities are being coordinated with Washington.
Samsung is reportedly converting its Xian plant, which produces approximately 40% of its global NAND output, to manufacture 286-layer V9 NAND chips. A person familiar with the project, known internally as "Monami," said the company targets a monthly output of 5,000 wafers by December 2026 and 40,000 wafers by December 2027. SK Hynix is working to switch its Dalian facility to chips with 240 or more layers, up from its current 192-layer production. SK Hynix is also in discussions with the Trump administration regarding a potential new NAND factory in the United States.
The scale of the shift is reflected in regional market data: YMTC's share of the Chinese NAND market rose to 38.5% in the second quarter of 2026, surpassing Samsung, which saw its share drop to 33.5%. SK Hynix’s share fell to 17% during the same period. By upgrading to 240-layer and 286-layer technology in China, the South Korean firms are attempting to recover ground in a market where they currently produce less advanced chips than they do at their home facilities in South Korea. Without these upgrades, industry analysts cited in Source 2 noted that the companies would face significant long-term CapEx (capital expenditure) uncertainty.
The situation sets a precedent for how the U.S. government manages export controls for allied nations operating within China. The current annual licenses for Samsung and SK Hynix are set to expire, requiring new approvals for shipments of American chipmaking tools after December 31. Future developments depend on ongoing negotiations between the South Korean firms and the U.S. Department of Commerce. Specifically, Samsung’s Xian plant targets its next major production milestone for December 2027, while SK Hynix’s Solidigm unit continues to prepare for a potential U.S. initial public offering.