According to Reuters on November 3rd, sources familiar with the matter said that U.S. officials have been delaying the approval of export licenses for the US chip manufacturing equipment required by SK Hynix to expand its production in China. This has put the Korean chip manufacturer's plans to build a new memory chip factory in New York State in a difficult situation.
Sources familiar with the matter said that SK Hynix is applying for a U.S. export license in order to equip its factory in Dalian with necessary equipment. The company believes that increasing production at its Dalian factory will help finance its planned expansion of operations in the United States. However, the U.S. Department of Commerce has yet to approve the new license.
SK Hynix's Solidigm plan to invest approximately US$4.5 billion will involve building two NAND flash memory factories in Marcy, New York State. As time progresses, the total investment could reach around US$10 billion.
Reports say that these negotiations raise a question: To attract foreign investment and encourage chip manufacturing to return to the United States, to what extent is the Trump administration willing to loosen the national security restrictions aimed at preventing U.S. technology from being exploited by China?
The United States Congress has established a bipartisan committee, the China America Economic and Security Review Committee, whose member Linden Miller said, "Ultimately, nothing can be advanced without the green light from the White House."
Sources familiar with the situation said that the negotiations are still ongoing, and whether the expansion of the Dalian factory will be approved is key to SK Hynix’s investment plan in New York State.
It is reported that since the end of August, executives from SK Hynix’s US subsidiary Solidigm have held nearly 10 meetings with officials from the U.S. Department of Commerce.
According to this insider, the company needs to increase production in China and develop more advanced NAND chip manufacturing technologies in order to generate revenue, fund the construction of factories in the United States, and maintain competitiveness.
At a meeting last week, Jeffrey Cleese, the Deputy Secretary of Commerce of the United States, remained firm in his position that the United States does not want to allow more American chip manufacturing equipment to be exported to China for technological upgrading or capacity expansion. However, the Department of Commerce has not officially rejected applications for licenses to export American equipment to the Dalian factory, which is intended to fill the empty spaces in existing cleanrooms. The official also stated that separate negotiations are underway regarding license applications for equipment exports that will be used to maintain the operation of the Dalian factory by 2027.
At a meeting held in late August, Richard Qin, co-CEO of Solidigm, and other executives met with U.S. Commerce Secretary Howard Rucknick and Secretary of Commerce Wilbur Ross. Officials from the Trump administration seemed enthusiastic about the potential investments in the United States and the construction of NAND factories, and were eager to find solutions.
Since then, Solidigm has drafted several versions of the license application documents and continuously improved the content of the applications during the process of collaborating with the Ministry of Commerce.
Solidigm stated in a statement last week: "As a company founded in the United States with its headquarters there, Solidigm regularly evaluates various strategic options in order to better serve customers and enhance long-term competitiveness. The company is currently exploring potential locations around the world for building NAND memory chip manufacturing facilities. No decisions have been made regarding any specific action plans."
Sources familiar with the matter said that the company’s representatives also held talks with officials from the U.S. Treasury Department. If SK Hynix wants to purchase equipment for its Chinese factories, it still needs a waiver from the U.S. Treasury Department regarding foreign investment restrictions. The Treasury Department’s response was that they would first wait and see how the Commerce Department will handle this matter.
"The county executive of New York State, Albany County, Antony Pierson said: "We hope to get a reply within the next few weeks.” He also added that a federal investment tax credit policy will expire at the end of this year."
SK Hynix stated in a press release on October 23rd that Solidigm had considered raising funds through an initial public offering (IPO) to support the construction of production facilities in the US and meet growing demand for storage chips. However, given recent market conditions and stock price trends, the IPO plan has been temporarily suspended for evaluation. The statement affirmed: "Expanding Solidigm's capacity and enhancing its competitiveness remains a top priority."
The Chinese Ministry of Commerce has stated that semiconductors are highly globalized industries. After decades of development, a symbiotic industrial structure has been formed between different companies. This is the result of both market laws and corporate choices. The actions taken by the US are motivated by self-interest, turning export controls into tools for manipulation. This will have a significant negative impact on the stability of the global semiconductor industry chain and supply chain. China opposes such actions.
China urges the US side to immediately correct its wrong practices and maintain the safety and stability of the global industrial chain and supply chain. China will take necessary measures to firmly protect the legitimate rights and interests of enterprises.
