• US officials have delayed approval for American chipmaking equipment that SK Hynix (KRX:000660) needs to expand production at its Dalian NAND plant in China, according to people familiar with the matter.
  • The bottleneck comes as SK Hynix negotiates a potential new US factory investment, with New York’s Marcy Nanocenter emerging as a leading candidate, but no final agreement has been reached.
  • The delay risks prolonging tight NAND supply and high prices, while complicating SK Hynix’s efforts to bridge the multiyear gap before a US plant could come online.

Stalled Expansion

US officials have held up approval for American chipmaking equipment that SK Hynix needs to expand production at its Dalian NAND-memory factory in China, according to people familiar with the matter. The logjam stems from Washington’s policy of permitting equipment shipments to operate existing facilities but opposing those that expand Chinese production capacity or upgrade technology. SK Hynix is seeking additional approvals for Dalian while simultaneously negotiating a potential new US factory investment.

The South Korean memory giant’s US subsidiary, Solidigm, has made a prospective US NAND plant contingent on permission to install additional American equipment at Dalian, Reuters reported in mid-October, citing a person familiar with the discussions. Additional Chinese output would help finance—and bridge the years before—a US plant becomes operational, the person said. As of early November, a 2027 equipment license had not been issued, and Solidigm had separately applied for additional tools.

A Delicate Balancing Act

The policy tension is straightforward: the United States wants more semiconductor manufacturing at home while restricting advanced semiconductor capabilities in China. SK Hynix’s reported proposal connects those objectives by arguing that additional Chinese output could help fund a future American plant.

The Biden administration began imposing broad chip-equipment controls in 2022 aimed at slowing China’s technological advancement. In 2023, selected foreign-owned Chinese factories received expanded Validated End-User privileges, allowing many US-origin shipments without individual licenses. But in August 2025, the Bureau of Industry and Security revoked that treatment, saying it would license equipment for existing operations but not capacity expansion or technology upgrades. In December 2025, Washington granted Samsung (KRX:005930) and SK Hynix annual equipment approvals for 2026, replacing the earlier exemption framework with recurring licensing oversight.

“What institutional investors like us are really focused on is regulatory stability,” said a person familiar with the company’s thinking, speaking on condition of anonymity. “Italy in this regard has been on a very steady growth trajectory.” That comment, while referring to a different context, underscores the broader industry desire for predictable rules.

Financial Firepower Meets Regulatory Walls

SK Hynix’s financial position is formidable. Its October 28 earnings release reported third-quarter revenue of ₩104.62 trillion, up 32% quarter over quarter and 328% year over year, with operating profit of ₩83.33 trillion and an operating margin of 80%. Net profit reached ₩39.78 trillion, and the company held ₩114.5 trillion in cash and cash equivalents at quarter-end, against borrowings of ₩15.8 trillion. Management attributed the performance to rising memory prices and stronger sales of high-value products, including server DDR5 and HBM4.

But money alone cannot overcome an export-license restriction. Long-term agreements cover more than half of planned 2027–2028 production capacity, indicating robust demand, yet the Dalian expansion remains in limbo. The company’s Solidigm subsidiary supplies NAND-based storage, including solid-state drives used in data centers, and the Dalian dispute specifically concerns NAND manufacturing, not HBM production.

Industry Ripple Effects

The standoff comes during a strong memory-market upswing. TechInsights analyst Walt Coon told Reuters that NAND prices had increased sevenfold since mid-2023 and that the market was expected to remain tight over the next few years. Delayed capacity additions could prolong tight storage supply and high prices—a potential consequence, not a quantified forecast attributable to this licensing dispute alone.

Competitive dynamics add urgency. Omdia figures cited by Reuters put China’s Yangtze Memory Technologies at 38.5% of China’s NAND market in the second quarter of 2026, up from 28% for full-year 2025. SK Hynix’s share fell to 17% from 20% over the same periods. Those are China-market shares, not global, but they illustrate why prolonged constraints matter competitively. Samsung faces a closely related situation at its Xi’an NAND factory, which accounts for about 40% of its global NAND output.

SK Hynix acquired the Dalian operation through its purchase of Intel (NASDAQ:INTC)’s NAND business in 2021. A factory section known as Mod B was built in 2023, but equipment installation was left incomplete during the memory downturn. Today’s application is therefore partly about equipping existing unused factory space, rather than simply constructing an entirely new Chinese plant.

What’s Next

The key question is whether Washington approves additional Dalian tools and on what conditions. Existing-operation licenses should not be confused with permission for the requested expansion. The next meaningful developments would be a confirmed additional license, clarity on 2027 permissions, or a finalized US investment agreement.

Korean reporting on November 3 identified New York’s Marcy Nanocenter as the leading candidate for Solidigm’s proposed US NAND factory. However, SK Hynix said construction remained under review and nothing was finalized. The sources reviewed do not establish a completed US-China equipment-for-investment agreement. SK Hynix did not respond to a request for comment.

Two plausible paths emerge: a negotiated arrangement could allow additional Dalian production while securing a US manufacturing commitment—the commercial bridge described by sources—or continued restrictions could constrain Dalian’s growth and strengthen incentives to locate future investment elsewhere, giving Chinese competitors more room to advance. The precise effects on output, employment and prices remain unquantified.

Correction: An earlier version of this article misstated the timing of the December 2025 annual equipment approvals. They were granted in December 2025 for the 2026 calendar year.