Two Firms Invest 1.5 Trillion Won to Enhance Chip Technology and Increase Memory Supply
A view of the SK hynix DRAM plant in Wuxi, China. (Photo provided by SK Hynix)
Samsung Electronics and SK hynix are making large-scale facility investments in their Chinese plants to simultaneously enhance both process technology and production capacity. As the global artificial intelligence (AI) investment boom intensifies the memory semiconductor shortage, they are fully mobilizing even their Chinese factories to increase supply. Through these large-scale investments, Samsung and SK expect to expand chip supply and improve profitability by upgrading their NAND flash and DRAM production processes.
According to the Financial Supervisory Service on March 24, Samsung Electronics made an investment of 465.4 billion won (approximately $344 million) in its Xi’an, China plant last year, a 67.5% increase from the previous year’s 277.8 billion won. The Xi’an plant is Samsung Electronics’ only overseas NAND flash production base, accounting for approximately 40% of its total output.
After investing approximately 698.4 billion won in the Xi’an plant in 2019, Samsung Electronics did not make any significant investments from 2020 to 2023.
However, the company is understood to have resumed investment for 2024 with an injection of 277.8 billion won, and increased the investment amount to 465.4 billion won last year, upgrading the local production lines.
SK hynix also executed investments exceeding 1 trillion won last year in its DRAM production plant in Wuxi and its NAND flash manufacturing subsidiary in Dalian. It injected 581 billion won into the Wuxi DRAM plant, a 102% increase from 2024’s 287.3 billion won, and 440.6 billion won into the Dalian NAND plant, a 52% increase. This is the first time SK hynix has executed a trillion-won scale investment in its Chinese plants since acquiring Intel’s Dalian NAND plant in 2022.
The background for these aggressive investments in Chinese production facilities by Samsung Electronics and SK hynix, the global memory ‘Big 2’, despite U.S. export regulations on China, is the endless stream of memory semiconductor orders.
The memory market is currently experiencing a supply shortage, to the extent that this year’s entire production volume of DRAM and NAND flash is already sold out. As AI services evolve from simple search to ‘agentic’ forms that require more inference and learning, the demand for high-performance DRAM is increasing, and orders for ultra-high-performance memory needed for AI data centers to process information are also surging.
Indeed, UBS Securities has forecast that the global semiconductor market will expand by more than 40% from last year to reach $1 trillion (approximately 1,496 trillion won). Additionally, domestic demand in China is robust due to AI infrastructure investment. The memory semiconductor market within China reached approximately 458 billion yuan (approximately 99 trillion won) last year and is projected to grow even larger this year.
With their domestic production facilities alone unable to meet global demand, Samsung Electronics and SK hynix are pursuing supply expansion by upgrading their Chinese plants, one of their key production hubs. Through substantial additional investment, Samsung Electronics plans to transition the main process of its Xi’an NAND plant from 128-layer (6th generation) to 236-layer (8th generation).
An industry official explained, “To prevent the leakage of national core technology, a process gap of about two generations is maintained between overseas and domestic plants.” He added, “As Samsung is scheduled to produce 400-layer (10th generation) NAND products in Korea this year, the transition of the Chinese plant to the 8th generation will likely accelerate.”
SK hynix is also understood to have upgraded the DRAM production process at its Wuxi plant from the 10nm (nanometer, one-billionth of a meter)-class 3rd generation (1z) to the 4th generation (1a) with its recent investment. Through this, the Wuxi plant will be able to mass-produce high-value-added products such as 5th generation Double Data Rate (DDR5), which is expected to make a significant contribution to improving its business performance.
Another industry official commented, “The Wuxi plant, which accounts for over 30% of SK hynix’s total DRAM production, has been transformed into a plant for high-value-added products.” He also predicted, “The Dalian plant will also be able to improve its financial structure and increase production efficiency through expanded investment.”
Kim Eun-jin
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