South Korean semiconductor leaders Samsung Electronics and SK Hynix are modernizing their manufacturing sites in China to produce advanced NAND memory. These upgrades aim to satisfy the massive demand for AI technology while competing against the rising dominance of China's YMTC.

Advertisement

Samsung's "Monami" project targets 286-layer NAND in Xian

Samsung Electronics is currently overhauling its Xian facility, a site that accounts for roughly 40 percent of the company's total global NAND output. According to industry insiders, the company is implementing a project codenamed "Monami" to transition the plant toward producing 286-layer, V9 grade NAND chips.

The production goals for the Xian plant are ambitious.. Samsung Electronics aims to increase throughput to 5,000 wafers monthly by December of this year,with a long-term target of reaching 40,000 wafers per month by December 2027. The company has maintained that these upgrades are designed to meet global demand from U.S. customers rather than simply expanding capacity.

SK Hynix pursues 300-layer R&D and a new U.S. factory

SK Hynix is focusing its strategic upgrades on the Dalian facility in northeastern China, which the company acquired in 2021 after purchasing Intel's NAND operations. The firm is working to produce NAND chips with at least 240 layers, a capability that is presumably permitted under existing regulatory frameworks.

To mitigate the risks of operating within China,SK Hynix is reportedly pursuing two major strategic shifts :

  • Seeking Washington's approval to conduct research and development on 300-plus-layer chips.
  • Engaging in discussions with the U.S. government to construct a new NAND factory within the United States.

    • YMTC's 38.5 percent market share surpasses Samsung and SK Hynix

    The technological race in China is being driven by the rapid ascent of Yangtze Memory Technologies Co (YMTC). As reported by industry sources, YMTC controlled 38.5 percent of China's NAND market share in the second quarter, effectively overtaking Samsung Electronics, which holds 33.5 percent, and SK Hynix, which holds 17 percent.

    YMTC is not just competing on volume but also on technical specifications. While Samsung and SK Hynix focus on their respective upgrades, YMTC is already producing 160- and 232-layer NAND chips and has begun producing a modest volume of 294-layer chips, with plans to launch products exceeding 300 layers.

    The uncertainty of U.S. Commerce Department export licenses

    Despite these technological advancements, both Samsung Electronics and SK Hynix face significant regulatory hurdles. Since 2022,intensified U.S. export controls have required these firms to obtain annual licenses from the U.S. Commerce Department to use critical equipment, such as etching machines, in their Chinese plants.

    Several critical questions remain unanswered as these companies navigate this geopolitical minefield:

    • What is the total financial scale of these upgrades? Both companies have refrained from disclosing specific investment figures for their Chinese projects.
    • Will the U.S. allow capacity expansion? Regulators have signaled they are unlikely to grant licenses for expanding the actual capacity or upgrading technology at existing Chinese factories.
    • How much capital will be committed? The exact level of investment Samsung and SK Hynix will finalize remains nebulous.