Samsung Electronics and SK Hynix are upgrading their China factories to produce more advanced memory chips, four people familiar with the plans told Reuters, aiming to fend off competition from a fast-growing Chinese rival and meet huge AI demand. Samsung's plant in Xi'an, which makes NAND chips of around 200 layers and accounts for about 40% of the company's global NAND output, is being converted to produce 286-layer V9 NAND under a project internally called "Monami" — targeting 5,000 wafers a month in December and 40,000 a month by the end of 2027, Reuters reported. SK Hynix aims to move its Dalian plant from 192-layer products to NAND of 240 layers or more, and may seek U.S. permission for research on chips of over 300 layers there.

Source: Reuters (exclusive)

How much to invest in China has become a tricky question for the South Korean giants since the United States began imposing export controls on some chip-making equipment in 2022 to slow China's technological progress, Reuters reported. Both companies must seek U.S. licences annually to install U.S.-made equipment in China, and the U.S. Commerce Department's Bureau of Industry and Security said in 2025 it did not intend to grant licences to upgrade technology and expand capacity at foreign chipmakers' factories in China. Reuters could not determine to what extent U.S. authorities have granted the licences the planned upgrades need.

Source: Reuters (exclusive)

Both firms confirm — within U.S. rules

Samsung told Reuters the upgrade is aimed at meeting demand from global customers, including those in the U.S., that it complies with U.S. export rules, and that the company is "not expanding production capacity or constructing new manufacturing facilities". SK Hynix said it has been installing equipment at Dalian in consultation with the U.S. government, and is also in talks with the Trump administration over a new NAND factory in the United States, Reuters and TradingView's summary of the report said.

Source: TradingView (Reuters report summary)

The pressure comes from YMTC, whose share of China's NAND market reached 38.5% in the second quarter, up from 28% for all of 2025, according to research firm Omdia figures cited by Reuters — ahead of Samsung's 33.5% and SK Hynix's 17% in China. NAND chips store data in smartphones, computers and solid-state drives, including those feeding AI data centres; adding layers packs more storage into each chip at lower cost. Shares of both South Korean companies closed about 6% higher on Wednesday after the report, TipRanks reported.