South Korean semiconductor giant SK hynix is facing a major regulatory challenge that could complicate its ambitions to build a massive new memory-chip manufacturing complex in the United States.
The proposed project, which could involve an initial investment of approximately US$45 billion, centres on two NAND flash memory factories that its US-based subsidiary, Solidigm, is considering building in Marcy, New York.
But there is a significant complication: SK hynix also wants approval to bring additional American semiconductor manufacturing equipment into its existing facility in Dalian, China.
According to a November 3 Reuters report, the US Department of Commerce has not approved the additional export licences sought by the company. Washington is concerned that allowing more advanced American chipmaking equipment into China could expand Chinese manufacturing capacity or upgrade its technological capabilities.
The problem is particularly complicated because SK hynix reportedly sees increased production at Dalian as an important source of revenue for financing its potential American expansion.
The proposed New York project could eventually reach approximately US$100 billion, according to people familiar with the discussions cited by Reuters. However, neither that larger figure nor the initial investment amount represents a confirmed final commitment from the company.
The dispute puts the Trump administration in a difficult position: it wants foreign semiconductor companies to invest billions of dollars in American manufacturing, but it also wants to prevent sensitive technology from strengthening China’s semiconductor industry.
And for SK hynix, the decision could influence where one of the world’s biggest memory-chip manufacturers builds its next generation of production capacity.
The New York Project Could Become One of America’s Biggest NAND Investments
The potential investment is being explored through Solidigm, SK hynix’s US-based subsidiary specialising in NAND flash memory and enterprise solid-state drives.
Reuters reported that Solidigm is considering constructing two NAND manufacturing plants in Marcy, a community in Oneida County, New York.
The proposed initial investment is estimated at approximately US$45 billion, with the total potentially reaching US$100 billion over time.
If realised, the project would represent a major expansion of NAND manufacturing capacity in the United States.
NAND flash memory is a type of non-volatile storage technology that retains data even when a device is switched off. It is widely used in solid-state drives, smartphones, computers and enterprise storage systems.
Its importance has grown as technology companies build increasingly large artificial intelligence data centres.
These facilities need enormous amounts of storage to manage the data used by AI models, cloud platforms and high-performance computing systems.
That demand has created an attractive opportunity for memory manufacturers, particularly companies capable of supplying high-capacity enterprise SSDs.
However, building a semiconductor fabrication plant is expensive and takes years. A project of this scale requires significant financing, specialised equipment, construction expertise and a reliable supply chain.
For Solidigm, the potential New York investment is therefore not simply about finding a location. It is also about securing the financial resources and manufacturing conditions needed to compete globally.
Why a Factory in China Could Determine the Future of a Factory in America
The most unusual part of the proposal is the connection between SK hynix’s Dalian facility and its potential New York expansion.
SK hynix operates a NAND manufacturing facility in Dalian, China, which it acquired as part of its purchase of Intel’s NAND and solid-state drive business.
The original acquisition was valued at approximately US$9 billion.
Reuters reported that SK hynix wants additional US-made semiconductor manufacturing equipment for its Dalian operation.
The company argues that installing more equipment and increasing production would help it generate revenue to support the proposed American expansion.
The Dalian facility also has existing cleanroom space that was constructed in 2023 but was not fully equipped during the earlier downturn in the memory market.
SK hynix has argued that filling this unused space would not necessarily increase the facility’s overall production capacity.
That distinction matters because Washington’s export-control policy is designed to prevent American semiconductor technology from helping China expand or upgrade sensitive manufacturing capabilities.
US officials have reportedly been reluctant to approve equipment shipments that could enable those outcomes.
Reuters reported that Solidigm executives have held nearly 10 meetings with Commerce Department officials since late August as they attempt to resolve the issue.
The discussions have not produced a final approval.
However, the Commerce Department has also not formally rejected the additional equipment application described in the Reuters report.
SK hynix Clarifies: Existing US Equipment Licence Is Still Valid
Following the Reuters report, SK hynix issued an important clarification on November 4.
According to South Korean news agency Aju Press, the company said it continues to bring US-made semiconductor manufacturing equipment into its Dalian facility under an existing government-approved export licence.
The company explained that these authorisations are negotiated and renewed annually, with discussions for the following year’s approval already underway.
An SK hynix official said the company currently has a valid licence and that approved equipment shipments are continuing.
This means the situation should not be interpreted as a complete halt to American equipment shipments to Dalian.
There are separate issues involved:
- The existing licence that allows certain approved equipment shipments to continue.
- The additional equipment approvals being sought for the Dalian facility.
- The separate licensing discussions covering equipment needed to maintain operations in 2027.
SK hynix also said it has not finalised any specific plan for a new US semiconductor manufacturing facility.
The company acknowledged the need to strengthen its American manufacturing presence but said it was still reviewing the possibility.
This clarification is crucial because the reported US$45 billion project remains a proposal rather than a confirmed construction commitment.
Washington’s Semiconductor Restrictions Are Creating a Major Policy Dilemma
The dispute reflects one of the biggest challenges facing the US semiconductor industry: how to attract foreign investment without weakening restrictions on technology exports to China.
The Trump administration wants international chipmakers to establish more production facilities inside the United States.
The strategy is intended to strengthen domestic manufacturing, create employment opportunities and reduce reliance on overseas semiconductor supply chains.
But the government also maintains restrictions on the export of advanced semiconductor manufacturing equipment to China.
Washington argues that certain technologies could help Beijing develop more sophisticated chips, including components with potential military and national-security applications.
Allowing additional American equipment into Dalian could therefore create concerns about whether US technology might indirectly strengthen China’s semiconductor capabilities.
Reuters reported that the negotiations have also involved the US Treasury Department.
According to people familiar with the discussions, Treasury may need to consider a waiver involving outbound-investment restrictions connected to the proposed equipment purchases.
The department has reportedly been waiting for the Commerce Department’s position before proceeding.
This makes the situation more complicated than a routine export application.
The decision could involve national security, foreign investment, industrial policy and the administration’s broader strategy for competing with China.
Why the White House Could Have the Final Say
The negotiations have attracted attention beyond the Commerce Department.
Leland Miller, a member of the US-China Economic and Security Review Commission, told Reuters that the project would ultimately require approval at the highest levels of the American government.
His assessment highlights the political importance of the dispute.
A large semiconductor investment could bring significant economic benefits to New York, including construction activity, manufacturing employment and a stronger local technology industry.
But granting additional equipment approvals for a Chinese facility could raise questions about the effectiveness of Washington’s technology restrictions.
The administration therefore faces competing priorities.
If it rejects the additional equipment requests, SK hynix could reconsider the scale, timing or location of its proposed American expansion.
If it grants approval, officials could face criticism for allowing additional American semiconductor technology to reach a manufacturing facility in China.
Neither outcome is straightforward.
AI Is Turning NAND Memory Into a Strategic Technology
The timing of the dispute is particularly important because the artificial intelligence boom is changing the economics of the semiconductor industry.
AI development is often associated with powerful processors and graphics processing units, but memory and storage are equally important.
AI data centres require high-bandwidth memory to move information quickly between processors. They also depend on enormous storage systems to retain training data, model information and other digital content.
NAND flash memory is a critical part of that storage infrastructure.
The increasing demand for enterprise SSDs has created new opportunities for manufacturers such as SK hynix and Samsung Electronics.
According to Counterpoint Research figures reported by WWC One Media, global NAND market revenue rose 70% quarter-on-quarter in the second quarter of 2026, following a 90% increase in the first quarter.
The same report highlighted the growing importance of enterprise storage as AI infrastructure expands.
WWC One Media previously examined this shift in its report, Samsung and SK hynix Hold Top NAND Spots as AI Demand Sends Memory Market Soaring.
The opportunity is enormous, but manufacturers must expand capacity carefully.
Building new facilities takes years, while demand for storage and memory products can change much faster.
That creates pressure on companies to secure equipment, financing and production space before competitors capture more of the market.
SK hynix Is Not the Only Company Feeling the AI Memory Squeeze
The effects of the AI-driven memory boom are spreading throughout the technology industry.
Smaller smartphone and laptop manufacturers have warned that securing enough memory components is becoming increasingly difficult.
Some are redesigning products, arranging component purchases months in advance and preparing for higher production costs.
WWC One Media explored these pressures in Small Phone and Laptop Makers Are Running Out of Memory Chips — But Paying More May No Longer Be Enough.
The same supply pressures are affecting personal computer buyers.
In Singapore, rising demand from AI data centres has contributed to higher prices for RAM, SSDs and graphics cards, as examined in Singapore PC Prices Surge as AI Data Centres Drive Up Costs of RAM, SSDs and Graphics Cards.
The broader infrastructure boom is also increasing demand for servers, networking equipment and storage.
WWC’s report on Global Server Shipments to Surge 15.1% as AI Boom Powers Data Centre Expansion examines how quickly the industry’s infrastructure requirements are growing.
For SK hynix, the challenge is to increase production capacity without running into regulatory restrictions that could complicate its international operations.
New York Officials Are Watching the Decision Closely
The potential factory could be economically significant for Oneida County, where Marcy is located.
Reuters reported that county executive Anthony Picente remained hopeful that the negotiations would produce an answer within the following weeks.
Timing matters because a federal investment tax credit is due to expire at the end of 2026, according to the reporting.
A decision could therefore influence whether the proposed investment moves forward under the current financial and regulatory conditions.
However, the presence of local government support does not guarantee that the project will be approved.
Solidigm has maintained that it is exploring potential locations around the world and has not made a final decision about a specific site or investment plan.
The company also previously explored an initial public offering as a possible way to support future expansion, but SK hynix said on October 23 that it had paused its review of IPO options because of market conditions and share-price trends.
That adds another financing consideration to the proposed American expansion.
SK hynix Already Has Another Major US Semiconductor Project
The proposed New York NAND complex should not be confused with SK hynix’s separate investment in Indiana.
The company is developing an advanced packaging and research facility in West Lafayette, Indiana, with an investment valued at more than US$4 billion.
That project is focused on advanced packaging and high-bandwidth memory technology used in artificial intelligence and high-performance computing systems.
NAND flash memory and high-bandwidth memory serve different purposes.
NAND provides long-term data storage, while HBM enables extremely fast data access and transfer for advanced processors.
Both are important to AI infrastructure, but the manufacturing processes and technologies are different.
The Indiana project demonstrates that SK hynix is already investing in the American semiconductor ecosystem.
The potential New York project would represent another major step, expanding the company’s presence into NAND manufacturing.
Could SK hynix Move Its New York Project Somewhere Else?
One of the biggest unanswered questions is whether Solidigm will continue pursuing Marcy if the negotiations with Washington fail to produce a workable arrangement.
Reuters reported that the company is reviewing potential locations around the world.
That leaves open the possibility that the proposed investment could be reduced, delayed or redirected.
However, no final decision to abandon New York or relocate the project has been announced.
The company’s position remains that it is exploring options and has not committed to a specific course of action.
For the United States, losing a potential investment of this size would represent a setback in its effort to attract more semiconductor manufacturing.
For SK hynix, building a factory in America could strengthen its access to customers and diversify its production footprint, but the financial and regulatory conditions must make commercial sense.
What Happens Next?
The next major development will likely come from the ongoing discussions over additional equipment licences for the Dalian facility and the separate approvals needed to maintain operations in 2027.
The existing licence remains valid, according to SK hynix, but that does not resolve the separate application for additional equipment.
The company must also decide whether the proposed New York investment remains financially viable under the available regulatory conditions.
For Washington, the challenge is finding a balance between attracting foreign semiconductor investment and maintaining its restrictions on technology transfers to China.
For New York, the stakes include a potentially enormous manufacturing investment and the jobs and economic activity that could come with it.
And for the global technology industry, the outcome could provide another indication of how far geopolitical restrictions are reshaping semiconductor supply chains.
SK hynix wants to expand its American manufacturing footprint, but its ability to do so may depend partly on what Washington allows it to do in China.
That is the central contradiction at the heart of this proposed US$45 billion investment — and the decision could have consequences well beyond one factory in New York.
