Samsung and SK Hynix Are Upgrading Their China Plants for More Advanced NAND Chips — How Far U.S. Licences Go Is Still Unclear

Two of the world's biggest memory makers are refitting the Chinese factories Washington has spent four years trying to freeze in place — and the part of the story nobody could confirm is the part that matters most.

Samsung Electronics and SK Hynix are upgrading their factories in China to produce more advanced NAND flash memory, according to a Reuters report on Wednesday, Oct. 21, based on four people familiar with the plans. Both companies confirmed to Reuters that upgrades were underway and were being done in close consultation with Washington, though neither disclosed the production details the report sets out. The stated aims are to hold off Yangtze Memory Technologies Co, the fast-growing Chinese rival known as YMTC, and to meet heavy demand tied to artificial intelligence. NAND retains data without power and is used in smartphones, personal computers and the solid-state drives inside AI data centres; stacking more layers into each chip raises storage density and lowers cost per bit.

Xian carries the scale of the bet

The larger conversion, as reported, is Samsung's. Its plant at Xian in northwestern China accounts for about 40% of the company's global NAND output and currently makes chips with about 200 layers, according to two of the people. Under an internal project called Monami, Samsung is converting the plant to 286-layer V9 NAND, aiming for monthly output of 5,000 wafers in December 2026 and then 40,000 wafers a month by December 2027, one of the people said. That destination would put Xian in line with what Samsung already sells from outside China, where its NAND reaches 286 layers. Samsung's own statement was narrower than the sourced plan: it said the upgrade complies with U.S. export regulations and is aimed at meeting growing demand from global customers, including those in the United States, and it stated plainly that the company is not expanding production capacity and is not constructing new manufacturing facilities. The distinction matters — a technology conversion of an existing line, on Samsung's account, rather than a bigger footprint.

Dalian is the parallel move, at a lower rung

SK Hynix's reported step is smaller but pointed the same way. At Dalian in northeastern China it currently makes 192-layer products, and it is looking to switch production there to NAND with 240 layers or more, according to three people. One person said the company is authorised to make chips with up to 240 layers at Dalian and may seek permission from Washington to carry out research and development on chips with more than 300 layers there, work that would lay groundwork for potential production in the United States. Dalian came to SK Hynix through its 2021 purchase of Intel's NAND operations; it remains the only NAND manufacturing site for that business, now called Solidigm, which is preparing for a U.S. initial public offering. SK Hynix sells NAND of up to 321 layers outside China, so even the reported Dalian ceiling leaves the Chinese plant a generation behind the company's best — a gap that is itself a measure of the export-control regime.

The licence question is the story's open centre

None of that establishes what Washington has actually approved, and this article does not claim otherwise. Since 2022 the United States has restricted some chipmaking-equipment exports to China, and both companies must now seek U.S. licences annually to install U.S.-made equipment such as etching machines at their Chinese plants. In 2025 the Commerce Department's Bureau of Industry and Security said it did not intend to grant licences to upgrade technology or expand capacity at the foreign chipmakers' factories in China. Asked for this report, the bureau did not directly address the status of approvals for the two companies and pointed back to that 2025 position: licences intended for operating existing factories, but not for expanding capacity or upgrading technology. Reuters could not determine to what extent U.S. authorities have granted export licences for the equipment the planned upgrades need. Readers should hold those two facts together: confirmed company statements that upgrades are underway in consultation with Washington, and an on-record 2025 bureau position against upgrade licences, with the actual licence record undetermined.

YMTC explains why standing still stopped working

The competitive cost of the freeze is now measurable. YMTC took 38.5% of China's NAND market in the second quarter, up from 28% for all of 2025 and overtaking Samsung, according to research firm Omdia figures cited by Reuters. Samsung's share slipped to 33.5% from 36%, and SK Hynix's fell to 17% from 20%. YMTC's range is mostly 160-layer and 232-layer chips, with a small amount of 294-layer production and plans for products above 300 layers, according to two separate people. In other words, the Chinese rival is not merely cheaper capacity at the low end; it is climbing the same layer ladder the South Korean plants in China have been unable to climb, while selling into the home market those plants were built to serve. Executives at both South Korean companies have publicly warned that geopolitical tensions are undermining their Chinese operations, and the share figures show the warning was not abstract.

The American factory talks run alongside, not instead

A separate Reuters report on Oct. 15 supplies the negotiating context, and it should not be blended into the Oct. 21 news. In that earlier reporting, SK Hynix had made a new American factory contingent on Washington letting it send more U.S.-made equipment into Dalian to raise output there, according to two people. Its U.S. unit Solidigm wanted to install equipment in unused space at Dalian — a fab area built in 2023 and known as Mod B, whose buildout was left incomplete in the last memory downturn — using tools from U.S. equipment makers including Lam Research, Applied Materials and KLA. Expanded output from China would help fund a U.S. NAND factory and bridge to producing more in America, one person said. The Oct. 15 report also recorded that Commerce revoked the companies' earlier licence exemptions last year, that a December decision issued a 2026 licence for Dalian that limited the quantity of equipment, and that no licence for more equipment in 2027 had yet been issued. The Oct. 21 report says SK Hynix is in discussions with the Trump administration over a new U.S. NAND factory; it does not update the condition reported on Oct. 15, and this article treats the two as distinct.

What to watch from here

Three things will resolve what this report leaves open. First, any U.S. statement or filing that actually specifies licences for the Xian or Dalian upgrades — until then, the extent of approvals is unknown, not assumed. Second, whether Samsung's Xian conversion tracks its reported path from 5,000 wafers a month in December 2026 toward 40,000 by December 2027, which would be visible evidence that equipment is arriving. Third, whether SK Hynix's authorised 240-layer ceiling at Dalian holds, rises, or is joined by permission for the 300-plus-layer research it may seek. The demand side is not the constraint: AI data centres are absorbing NAND as fast as the industry can stack it. The constraint, as it has been since 2022, is a licence file in Washington that nobody outside it has yet been able to read.