South Korean semiconductor manufacturer SK Hynix (NASDAQ:SKHY) is seeking approval from US authorities to export additional American-made chipmaking equipment to its manufacturing facility in China, according to a Reuters report published on Thursday.
The request is linked to plans by its US subsidiary, Solidigm, to establish a new NAND flash memory manufacturing plant in the United States, as the company seeks to increase production amid a global shortage of memory chips.
The proposed equipment shipments would support operations at SK Hynix’s facility in Dalian, China, where part of the manufacturing complex remains without a full installation of production machinery.
The discussions come as Washington continues to restrict exports of advanced semiconductor manufacturing equipment to China while encouraging chipmakers to expand production capacity in the United States.
According to Reuters, SK Hynix wants to install additional semiconductor manufacturing equipment in an unused section of its Dalian facility known as Mod B.
The area was completed in 2023, but equipment installation was not finished following a downturn in the global memory semiconductor market.
The company is now seeking to make use of the available manufacturing space as demand for NAND flash memory increases.
NAND chips are widely used in solid-state drives, including storage systems supporting artificial intelligence data centres and cloud computing infrastructure.
A global shortage of memory chips has contributed to substantial price increases, creating an incentive for manufacturers to increase production from existing facilities.
Solidigm is seeking a US export licence covering additional equipment for the Dalian plant, which uses machinery supplied by American semiconductor equipment manufacturers including Lam Research, Applied Materials and KLA.
The proposed shipments remain subject to US government authorisation.
SK Hynix told Reuters that equipment installation at the Mod B section was being carried out in consultation with US authorities and under the relevant government approvals.
The company also stated that it was not seeking to expand the facility’s production capacity.
That position distinguishes the company’s stated plans from suggestions that it intends to increase the plant’s overall manufacturing capacity.
Although additional equipment could allow the company to make greater use of existing production infrastructure, SK Hynix has not characterised the project as a capacity expansion.
The distinction is relevant because US restrictions on semiconductor equipment exports to China have increased regulatory scrutiny of manufacturing investments involving American technology.
The company has not disclosed the value of the equipment covered by its latest request or provided a timetable for completing installation.
The Reuters report indicated that additional production from the Dalian facility could support Solidigm’s plans to build a NAND flash memory factory in the United States.
According to a source cited by the news agency, production in China could help generate funding for the proposed American investment while providing an interim source of supply before domestic manufacturing capacity becomes available.
The arrangement would potentially allow Solidigm to benefit from existing manufacturing infrastructure while preparing for a longer-term expansion of US operations.
Solidigm is also considering an initial public offering as early as 2027 to help finance the planned investment, according to Reuters.
However, no final decision on an IPO, factory location or investment amount was disclosed in the report.
The potential listing and manufacturing project remain under consideration rather than confirmed transactions.
The proposed equipment shipments come against a backdrop of increasingly restrictive US semiconductor export policies.
Washington has encouraged domestic and international chipmakers to invest in American manufacturing facilities while limiting China’s access to certain advanced semiconductor technologies.
The restrictions are intended to constrain China’s development of sophisticated chips used in artificial intelligence systems and military applications.
The US Commerce Department previously revoked exemptions that had allowed SK Hynix and Samsung Electronics to receive American semiconductor manufacturing equipment at their Chinese facilities without obtaining separate export licences.
As a result, shipments that previously qualified for exemptions now require individual regulatory approval.
The changes have created additional compliance requirements for foreign semiconductor manufacturers operating facilities in China.
For SK Hynix, the licensing process will influence how quickly it can complete equipment installation at Dalian while continuing to comply with US export regulations.
Shares in SK Hynix listed in Seoul declined approximately 11% on Thursday during a broader sell-off in technology stocks.
The decline came despite strong underlying demand for memory semiconductors, particularly those used in artificial intelligence and data centre infrastructure.
The memory industry has benefited from higher prices resulting from constrained supply, although manufacturers continue to face uncertainty surrounding capital expenditure, international trade restrictions and the timing of new production investments.
SK Hynix’s proposed equipment shipments and Solidigm’s potential US factory illustrate the challenges facing semiconductor companies with manufacturing operations across multiple jurisdictions.
The company’s ability to complete its Dalian equipment installation will depend on US regulatory approvals, while Solidigm’s proposed American expansion will require further investment and financing decisions.
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