Solidigm Discusses $45 Billion Investment in U.S. Chip Plant

Key Facts

Solidigm, a subsidiary of South Korea’s SK hynix, is in talks with the U.S. Commerce Department about a $45 billion investment in a new chip plant in the United States, according to Bloomberg Law. The report said on October 27 that the company wants Washington’s approval to send equipment to China to upgrade an existing plant in Dalian before deciding whether to proceed with the U.S. project. That puts the proposed expansion in both countries on an interconnected path: increased production at the Chinese site is tied to approval for the equipment, while the U.S. plant remains under discussion. The $45 billion figure does not represent a final investment decision, as talks are ongoing. The proposal comes as the company looks to meet growing demand for enterprise storage drives.

The details linking the two sites trace back to a Reuters report published on October 14, which said SK hynix was seeking Washington’s approval to export U.S. chipmaking equipment to China to increase production there, as a condition for building a U.S. plant. The report said Solidigm wants to install new equipment to produce NAND chips in unused space at the company’s Dalian site. The more recent Bloomberg report covered a request to send equipment to upgrade an existing plant, which differs in wording from Reuters’ description of new equipment and unused space. A source told Reuters that increasing production in China could help Solidigm finance a U.S. NAND plant, while also providing a bridge to ramping up production in the United States. SK hynix, in turn, said equipment installation at the Dalian “Mod B” unit was being carried out in consultation with and with the approval of the U.S. government, and denied seeking to increase capacity there.

Export approval matters in light of U.S. restrictions on chipmaking equipment sent to China. Reuters said the controls are aimed at slowing Beijing’s development of advanced semiconductors used in artificial intelligence applications and military activities. In a report published on October 15, the agency said the Commerce Department had not issued a license for additional U.S. equipment and technology for the Dalian site for 2027, according to a source familiar with the matter. The license status affects the company’s ability to determine the course of the Chinese site’s upgrade, while plans for the U.S. plant remain tied to an investment decision that has not been made. Reuters reported in September that the Dalian facility was Solidigm’s only NAND facility, and that building a plant in the United States would reduce its reliance on it.

The talks come amid a tight NAND market, as the memory is used in solid-state drives for AI data centers and cloud computing. Reuters quoted a TechInsights expert as expecting the market to remain tight over the next few years, and said prices had risen sevenfold since mid-2023. Those conditions help explain Solidigm’s drive to expand production capacity, while the parent company has confirmed plans to build a U.S. plant to meet growing demand for enterprise storage drives. New York, according to an earlier Reuters report, was a leading candidate for a U.S. NAND plant under consideration by Solidigm, with no investment agreement or final project details at the time. In September, Solidigm said no decision had been made on a specific strategic direction, while SK hynix said no particular plans had been confirmed.

Alongside its consideration of the project, SK hynix suspended its review of plans for a Solidigm pre-IPO and public offering. The company said Solidigm’s investment needs and plans to expand production capacity remained in place despite the suspension of the offering review. It attributed the decision to market volatility and a broader correction in semiconductor stocks, saying financial-market volatility had increased. On October 15, SK hynix shares listed in Seoul fell 11% amid a broader selloff in technology stocks, according to Reuters. L7 data also showed the “SKYHY” ticker closing at $145.36 on October 27, after $142.62 on October 26 and $137.02 on October 23; these are L7 market data for the specified ticker.

SK hynix said on October 23 that it would continue to assess the investment’s timing, scale and financing methods while considering different options to support Solidigm’s growth. This means the decision to suspend the offering review did not end expansion plans, but left their form of financing and timing under evaluation. The near-term step linked to the project is resolving the request for additional equipment for the Chinese site, as a 2027 license had not been issued as of October 14, according to Reuters. The $45 billion value of the U.S. plant remains under discussion with the U.S. Commerce Department. The company has yet to confirm a final decision to proceed with the project.