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Panoramic views of Samsung Electronics and SK Hynix. / Yonhap

Samsung Electronics and SK Hynix are upgrading NAND flash production equipment at their factories in China, Reuters reported on the 21st, citing four sources. Both companies drew a line against new capacity expansions, stating that the upgrades are proceeding under consultations with the U.S. government.

According to the report, Samsung Electronics is transitioning its Xi'an plant to a 286-layer NAND production structure. One source stated that the production target for the product stands at 5,000 wafers per month by December of this year and 40,000 wafers per month by December of next year. Upgrades to facilities at the Xi'an plant were also reported last year.

Samsung Electronics told Reuters that the move is "to meet growing demand from global customers, including those in the U.S.," adding that "it does not constitute expanding production capacity or building new manufacturing facilities." The company did not disclose detailed production plans.

SK Hynix is pursuing plans to transition products manufactured at its Dalian fab from the current 192-layer NAND to 240 layers or higher, sources said.

SK Hynix maintains that investments in its Dalian plant represent the intake of equipment under preexisting plans. Earlier, when equipment intake on the Dalian site was reported, the company explained, "We are not considering expansions for the Dalian Mod B fab completed in 2023, and equipment intake for Mod B is proceeding under consultation with and authorization from the U.S. government." The rationale is that the move continues existing capital expenditures rather than initiating new expansion projects.

Both companies must obtain annual authorizations from the U.S. government to bring U.S.-made semiconductor manufacturing equipment into China. The Bureau of Industry and Security (BIS) under the U.S. Department of Commerce set forth a policy last year allowing existing factory operations in China, but prohibiting capacity expansions and technological upgrades. Reuters noted that it could not confirm the extent to which U.S. authorities granted export licenses for equipment required in these facility investments.

Meanwhile, according to market research firm Omdia, Yangtze Memory Technologies Corp. (YMTC) saw its share of China's NAND market climb from 28% for the full year last year to 38.5% in the second quarter of this year, surpassing Samsung Electronics. Over the same comparison period, Samsung Electronics' market share slipped from 36% to 33.5%, while SK Hynix saw its share decline from 20% to 17%.

                                                                                                              Kim Han-seul