South Korean semiconductor giants Samsung Electronics and SK Hynix are upgrading their manufacturing facilities in China to produce more advanced memory chips, as they seek to meet rising demand from the artificial intelligence (AI) industry and compete with China’s rapidly growing domestic chipmakers.
According to a Reuters report citing four people familiar with the plans, both companies are working to manufacture NAND flash memory chips with more than 200 layers at their Chinese plants. The upgrades could help them maintain their competitiveness in a market increasingly shaped by AI data centres, cloud computing and high-capacity data storage.
However, the companies face a difficult operating environment as US export controls restrict access to certain American semiconductor manufacturing equipment and require annual licensing for equipment installations at their Chinese facilities.
Samsung Targets 286-Layer NAND Chips in China
Samsung is upgrading its semiconductor facility in Xi’an, northwestern China, to produce its 286-layer V9 NAND memory chips, Reuters reported.
The Xi’an plant is particularly important to Samsung because it accounts for approximately 40% of the company’s global NAND production, according to people familiar with the plans cited in the report.
The project, internally known as “Monami”, is targeting monthly output of 5,000 wafers by December 2026, followed by a planned increase to 40,000 wafers per month by December 2027.
Samsung said the upgrade complies with US export regulations and is intended to meet growing demand from global customers, including those in the United States. The company also said the project does not involve expanding production capacity or constructing new manufacturing facilities.
NAND flash memory is a type of non-volatile storage that retains information even when power is switched off. It is widely used in smartphones, personal computers, solid-state drives and data-centre storage systems.
Increasing the number of layers in a NAND chip allows manufacturers to pack more storage capacity into a smaller physical space, potentially improving efficiency and reducing costs.
SK Hynix Plans Advanced Production at Dalian Facility
SK Hynix is also working to upgrade its NAND manufacturing operations at Dalian, in northeastern China.
The company is looking to shift production from its existing 192-layer products to NAND chips with 240 layers or more, according to people familiar with the plans cited by Reuters.
The Dalian facility was acquired when SK Hynix purchased Intel’s NAND memory business in 2021. The business subsequently became known as Solidigm, which focuses on enterprise storage products.
One source told Reuters that SK Hynix is authorised to produce chips with up to 240 layers at the Dalian site. The company may also seek US permission to conduct research and development on chips with more than 300 layers.
Such research could help the company prepare for future manufacturing requirements, although the extent and timing of any further production upgrades remain uncertain.
US Export Controls Create Challenges
The upgrades come amid continuing technology tensions between Washington and Beijing.
Since 2022, the United States has introduced restrictions on exports of certain advanced semiconductor manufacturing equipment to China. These measures are intended to limit China’s access to technologies that could support its advanced computing and semiconductor capabilities.
Samsung and SK Hynix have faced additional uncertainty over the equipment they can install at their Chinese factories. Following changes to their previous authorisations in 2025, the companies must seek annual US licences for certain American-made manufacturing tools.
The US Commerce Department has said it intends to allow the companies to continue operating their existing facilities in China, while indicating that licences for technological upgrades and capacity expansion would not generally be granted under its stated policy. The precise status of approvals for the newly reported projects was not clear from the Reuters report.
Both companies have said their current upgrade efforts are being carried out in consultation with Washington and in accordance with applicable US regulations. The situation highlights the challenge of balancing access to the Chinese market with compliance with export-control requirements.
Chinese Rival YMTC Increases Competition
Another major factor behind the upgrades is the rise of Yangtze Memory Technologies Co (YMTC), a Chinese NAND manufacturer that has expanded its position in the domestic market.
According to market research firm Omdia, cited by Reuters, YMTC held 38.5% of China’s NAND market in the second quarter of 2026, overtaking Samsung, whose share stood at 33.5%. SK Hynix’s share was reported at 17%.
YMTC produces NAND chips with up to 232 layers in its main product lineup and also manufactures a smaller quantity of 294-layer chips, according to people familiar with its operations. The company is reportedly planning products with more than 300 layers.
The growing presence of Chinese manufacturers increases competitive pressure on foreign chipmakers, particularly as domestic customers look for alternatives to imported memory products.
For Samsung and SK Hynix, maintaining advanced production capabilities in China could help them serve customers in one of the world’s largest electronics markets. However, US restrictions could complicate their ability to keep pace with technological changes.
AI Demand Drives the Memory Chip Market
The rapid growth of AI services is increasing demand for storage and memory technologies. Data centres require substantial amounts of memory and storage to support AI training, inference, cloud services and large-scale data processing.
Although high-bandwidth memory used alongside AI accelerators has attracted considerable attention, NAND flash remains essential for storing the enormous volumes of data handled by modern computing infrastructure.
More advanced NAND technology can help manufacturers deliver higher storage density and improve the economics of large-scale data storage.
Outside China, Samsung has already commercialised 286-layer NAND products and unveiled a prototype with more than 400 layers. SK Hynix offers NAND products with up to 321 layers.
What Happens Next?
The future of the Chinese upgrades will depend on equipment availability, regulatory approvals, production schedules and market demand.
Samsung and SK Hynix must also consider the long-term risks of operating facilities in China while US technology restrictions continue to evolve. Any delay in accessing essential manufacturing equipment could affect their ability to introduce newer products on schedule.
For now, the reported projects demonstrate how the world’s leading memory chipmakers are attempting to protect their market positions amid two powerful forces: growing demand for AI-related storage and intensifying geopolitical competition over semiconductor technology.
