By Karen Freifeld
Nov 3 (Reuters) – US officials have held up approval for American chipmaking equipment needed by SK Hynix to expand production in China, complicating the South Korean chipmaker’s plans for new memory-chip plants in New York, according to people familiar with the matter.
SK Hynix is seeking US export licenses to equip its Dalian plant, arguing that increased production there would help fund its planned US expansion. But the Commerce Department has yet to approve the new licenses, the people said.
Its Solidigm unit plans to invest about $45 billion and build two NAND plants in Marcy, New York, two people said, with investment potentially reaching about $100 billion over time. NAND is memory that retains data even when power is turned off and is used for storage in data centers.
TRUMP ADMINISTRATION FACES POLICY DILEMMA
The negotiations raise questions about how far the Trump administration is willing to bend national security guardrails established to keep US technology from aiding China’s military, in order to bring foreign investment and chipmaking onshore.
“Ultimately, none of this is going to go forward without a green light from the White House,” said Leland Miller, a member of the US-China Economic and Security Review Commission, a bipartisan panel created by the US Congress. The White House did not immediately respond to a request for comment.
Negotiations are continuing, the people said, with approval for the Dalian expansion central to SK Hynix’s plans in New York.
COMMERCE DEPARTMENT MEETINGS INTENSIFY
Executives from SK Hynix’s US subsidiary, Solidigm, have met nearly 10 times with officials from the Commerce Department since late August, one of the people said. The company needs to ramp up production and develop more sophisticated NAND chipmaking in China to generate revenue to build a US facility and to stay competitive, the people said.
In a meeting last week, Commerce Under Secretary Jeffrey Kessler held to his position that the US did not want to allow more American chipmaking tools to China to upgrade or expand capacity, the person said, though the department has not formally denied a license to export American equipment to fill empty clean space in Dalian. The two sides are also negotiating a separate license for 2027 for equipment to keep up the Dalian facility, the person said.
At the late August meeting, Solidigm co-CEO Richard Chin and other executives met with Commerce Secretary Howard Lutnick and Kessler, one of the people said. The administration officials appeared excited about the possible investment and NAND facility in the United States and eager to work things out, the person said.
Since then, the company has drafted multiple versions of license applications, as the company refines the requests in collaboration with the department, the person said.
A spokesperson for the Department of Commerce did not immediately respond to a request for comment.
In a statement last week, Solidigm said: “As a US-founded and headquartered company, Solidigm regularly evaluates strategic alternatives to best serve its customers and enhance its long-term competitiveness. The company is currently exploring options for building a NAND memory fab at potential locations around the world. No decision regarding any specific course of action has been made.” Rancho Cordova, California-based Solidigm stuck to its statement from last week. SK Hynix did not immediately respond to a request for comment outside business hours.
NEW YORK OFFICIALS REMAIN HOPEFUL
Company representatives also have met with officials at the US Treasury Department, which would have to waive outbound investment restrictions for SK Hynix to purchase tools for China, the people familiar with the matter said. Treasury’s response was that it would wait and see what the Commerce Department does, one of the people said.
The Treasury Department did not immediately respond to a request for comment.
“Hopefully we’ll have an answer in the next couple of weeks,” said Anthony Picente, county executive for New York’s Oneida County, where the proposed facility would be located, adding that a federal investment tax credit expires at the end of the year.
Solidigm explored an initial public offering to help finance production facilities in the US and meet growing memory demand, but halted its review of the IPO options in light of recent market conditions and share price trends, SK Hynix said in an October 23 statement. “Expanding Solidigm’s production capacity and strengthening its competitiveness remain important priorities,” the statement said.
SK Hynix agreed to acquire Intel’s NAND factory in Dalian, China, for $9 billion in 2020, and took control of the facility and solid-state drive storage business shortly before the US instituted sweeping export controls on American chipmaking equipment to what it deemed advanced chip factories in China.
At first, the US waived the restrictions on foreign-owned chipmaking facilities in China. But last year, the Commerce Department revoked authorizations for foreign chipmakers in China to receive US equipment, deeming them a “Biden-era loophole,” and replacing the authorizations with annual licenses that allow suppliers to ship certain equipment and technology to the facilities with quantity limits. In an August 2025 statement, the Commerce Department said it did not intend to issue licenses to upgrade technology or expand capacity at fabs in China.
SK Hynix has said that installing equipment to fill empty space in Dalian would not expand capacity because it built the cleanroom in 2023. It is also looking to produce more sophisticated NAND products at Dalian, Reuters reported last month.
(Reporting by Karen Freifeld in New York; Editing by Chris Sanders and Matthew Lewis)
