Samsung upgrades China plant for 286-layer chips, SK Hynix advances Dalian upgrade

Key Facts

Samsung and SK Hynix are upgrading their factories in China to produce more advanced memory chips, and confirmed to Reuters that the work was being carried out in close consultation with Washington. A source told the agency that Samsung was converting its Xi'an plant to produce 286-layer NAND memory as part of the ongoing upgrade of its Chinese operations. The plant accounts for about 40% of Samsung's global output of this memory, according to Reuters sources, giving the technological shift significance within the company's production network. The agency linked the companies' moves to efforts to counter Chinese competition in the memory sector. The upgrades also aim to meet strong AI-related demand, according to Reuters, which cited the sector's needs among the drivers of the factory improvements.

In Dalian, SK Hynix aims to produce NAND memory with 240 layers or more, according to sources who spoke to Reuters about the upgrade plan. The site currently produces 192-layer chips, according to an agency source, compared with the more advanced technology the company is targeting at the plant. The facility relies on equipment from U.S. companies including Lam Research, Applied Materials and KLA, according to an earlier Reuters report in October. In that report, sources said Solidigm, SK Hynix's U.S. subsidiary, had tied its plan to build a NAND plant in the United States to securing a licence for additional equipment in Dalian. The licence to which the sources linked the U.S. plant plan concerns equipment exports to the existing Chinese facility.

The moves come after the U.S. Bureau of Industry and Security ended an exemption that allowed some foreign factories in China to import equipment and technology without licences. In its announcement of the rule change, the bureau said: "These companies will now need to obtain licences." It set out a policy of granting the licences needed to keep existing factories in China operating. But it said it did not intend to grant licences to expand production capacity or upgrade technology at those factories, the two activities covered by its stated position. Samsung, for its part, told Reuters that its plant upgrade did not involve expanding production capacity or building new factories.

SK Hynix previously announced the start of mass production of 321-layer NAND memory, with a capacity of 1 terabit per chip. The company said in its announcement that the new technology improved productivity by 59% compared with the previous generation. It explained that storing more bits per cell allows more data to be stored in the same space, a technical benefit it outlined in explaining the memory development. At Samsung, the company said bit density in its ninth-generation vertical NAND memory had increased by about 50%. That increase was relative to the eighth generation, according to Samsung's announcement of the start of mass production of the ninth generation.

The factory upgrades come amid rising memory prices, with SK Hynix saying in its July earnings statement that DRAM and NAND prices posted strong increases from the previous quarter. In the same statement, it announced long-term agreements with about 10 customers as part of its efforts to secure stable supplies. In September, Reuters cited TrendForce as saying manufacturers' prioritisation of capital spending on DRAM and high-bandwidth memory had limited additions to NAND production capacity and exacerbated its shortage. In trading on 14 October 2026, before the factory upgrade news was published, Samsung and SK Hynix shares rose more than 2% in South Korea. Their gains that session marked a partial recovery from the previous session's losses, according to Reuters.

On future supplies, Samsung said in its July earnings statement that it expected constraints to persist despite efforts to increase production. The company explained its position by saying: "Despite efforts to increase production, supply constraints are expected to persist." Samsung scheduled its earnings conference call for the third quarter of 2026 for 29 October 2026, according to an investor relations notice. The call is scheduled for 10 a.m., according to the time announced by the company. Further out, Samsung aims to produce 40,000 silicon wafers a month using the new technology in Xi'an by December 2027, according to a source who spoke to Reuters.