Samsung Electronics and SK Hynix are upgrading their semiconductor manufacturing facilities in China to produce more advanced memory chips, according to Reuters. The move comes as demand for AI infrastructure grows and Chinese chipmaker YMTC increases competition in the memory market.
What Happened?
South Korean semiconductor manufacturers Samsung Electronics and SK Hynix are working to upgrade their factories in China to produce more advanced NAND flash memory chips, Reuters reported on October 21, 2026, citing four people familiar with the plans.
The companies are reportedly targeting NAND chips with more than 200 layers, bringing their Chinese production capabilities closer to the technology manufactured at their facilities in South Korea.
However, their plans face regulatory challenges. US export controls introduced in 2022 have restricted China’s access to certain advanced semiconductor manufacturing equipment. Samsung and SK Hynix must obtain annual US licences to install certain American-made equipment at their Chinese facilities.
The companies are therefore trying to modernize their operations while navigating restrictions that could affect their manufacturing plans and competitiveness.
Why Are Samsung and SK Hynix Upgrading Their Chinese Factories?
Two major factors are driving the upgrades: increasing demand for memory chips and competition from Chinese manufacturers.
AI data centres require substantial amounts of memory and storage to support computing workloads, manage information and serve AI applications. As companies expand their AI infrastructure, demand for semiconductor products used in servers and data-storage systems has increased.
At the same time, Chinese memory manufacturer Yangtze Memory Technologies Co. (YMTC) has been gaining market share, according to the Reuters report.
For Samsung and SK Hynix, maintaining competitive manufacturing technology is important for serving customers and protecting their positions in the global memory market.
Upgrading existing factories could help the companies improve chip density and manufacturing efficiency without necessarily building entirely new facilities.
Samsung Targets 286-Layer NAND Chips at Its Xi’an Plant
Samsung is planning a significant technology upgrade at its NAND manufacturing facility in Xi’an, northwestern China.
According to Reuters, the factory currently produces NAND chips with approximately 200 layers and accounts for around 40% of Samsung’s global NAND output.
The company is reportedly converting the facility to manufacture its V9 NAND chips, which use a 286-layer architecture. The project is internally known as “Monami.”
One person familiar with the plans told Reuters that Samsung aims to reach monthly production of 5,000 wafers in December 2026, followed by an increase to 40,000 wafers per month by December 2027.
These figures represent reported production targets, not confirmation that the planned output has already been achieved.
Samsung told Reuters that the upgrade was being conducted in compliance with US export regulations. The company also said the project was intended to meet growing demand from global customers, including customers in the United States.
Samsung added that it was not expanding production capacity or constructing new manufacturing facilities as part of the upgrade.
What Is NAND Flash Memory and Why Does It Matter?
NAND flash is a type of non-volatile memory that retains stored information even when a device is switched off.
It is widely used in smartphones, personal computers, solid-state drives (SSDs) and data-storage systems.
The technology is also important for AI infrastructure, where large volumes of information must be stored and accessed efficiently.
Modern NAND chips stack multiple layers of memory cells to increase storage density. In general, adding more layers can enable manufacturers to store more data in a given physical area and potentially reduce the cost per unit of storage.
For AI data centres, improvements in storage technology can help support the growing volume of data associated with AI models, applications and enterprise workloads.
However, NAND flash is different from high-bandwidth memory (HBM), which is used alongside AI accelerators to provide high-speed access to data during computation. Both technologies are important to the wider semiconductor ecosystem, but they serve different purposes.
US Export Controls Complicate Semiconductor Investment in China
US restrictions have made decisions about semiconductor investment in China more complicated for South Korean chipmakers.
Since 2022, Washington has introduced controls affecting the export of certain advanced chipmaking equipment to China. Under the requirements described in the Reuters report, Samsung and SK Hynix must seek annual licences for specified US-made equipment used at their Chinese factories.
The US Commerce Department’s Bureau of Industry and Security also indicated in 2025 that it did not intend to grant licences for upgrades that would improve technology or expand capacity at the foreign chipmakers’ Chinese facilities.
These restrictions can make it harder for manufacturers to install newer equipment and modernize production processes.
The rules also create uncertainty for companies planning long-term investments, because access to essential manufacturing tools depends partly on regulatory approvals.
Samsung confirmed that its upgrades were being conducted in close consultation with Washington. SK Hynix told Reuters that it had been installing equipment at its Dalian factory in northeastern China in consultation with the US government.
Reuters said it could not independently determine the extent to which US authorities had granted the export licences required for the reported plans.
What This Means for the Global Chip Industry
The developments highlight the challenge facing semiconductor companies that operate across countries with competing technology and trade priorities.
China remains an important manufacturing location, while US export controls influence which equipment foreign chipmakers can install there. Companies must consider these restrictions alongside customer demand, technology roadmaps and competition.
Meanwhile, the expansion of AI infrastructure is increasing the importance of memory and storage technologies. Manufacturers that can improve performance, density and production efficiency may be better positioned to serve customers as AI adoption grows.
The outcome will depend not only on technological progress but also on regulatory decisions that determine which manufacturing upgrades can proceed.
What Happens Next?
The next important developments will be the progress of the reported factory upgrades, the availability of required equipment licences and the companies’ ability to meet their production targets.
Samsung’s reported goal of reaching 40,000 wafers per month at its Xi’an facility by December 2027 will be one milestone to watch.
For SK Hynix, further details about its Chinese factory upgrades and manufacturing plans would help clarify the scale and timing of its modernization efforts.
More broadly, the semiconductor industry will continue to monitor how US export controls affect manufacturing investments and competition among global memory-chip suppliers.
Conclusion
Samsung and SK Hynix are seeking to modernize their Chinese manufacturing operations as AI-related demand and competition in the memory market increase.
Samsung’s reported plan to introduce 286-layer NAND production at its Xi’an facility illustrates the technological improvements manufacturers are pursuing. However, US export controls remain a major consideration for equipment installation and factory upgrades.
The developments demonstrate how semiconductor manufacturing is being shaped by both the growing needs of AI infrastructure and the geopolitical environment in which chipmakers operate.
Source: Reuters, October 21, 2026. The production plans and targets described above are attributed to Reuters and the people familiar with the plans cited in its report.