South Korean semiconductor company SK Hynix has postponed the completion of its new NAND flash manufacturing plant in Dalian, China, amid a reduction in investment and US government restrictions on Chinese semiconductor imports. The facility, which began construction in May 2022, was initially expected to be completed by April or May 2023.
SK Hynix decided to reduce its facility investment by approximately 50% this year in anticipation of a downturn in the semiconductor industry, which has contributed to the delay. Another significant factor is the possibility that the new plant’s operation could be hindered by US government restrictions on Chinese semiconductor equipment imports.
The Dalian Plant 2 was conceived as an investment to expand SK Hynix’s 3D NAND mass production capacity, even before the company acquired Intel’s NAND division. In 2021, the acquisition allowed SK Hynix to take over Intel’s SSD business and the Dalian plant, which mainly mass-produces 96-layer and 144-layer NAND flashes.
However, over a year has passed since the groundbreaking of the second plant, and its completion remains unfulfilled. The US Department of Commerce imposed restrictions on the export of certain semiconductor manufacturing equipment to China in October 2022, granting a one-year grace period for companies such as Samsung Electronics and SK Hynix. This moratorium expires in October 2023, with the possibility of an extension remaining uncertain.
If the deferment of bringing in equipment is not extended, SK Hynix must complete the process within five months of the Dalian 2 plant’s completion. Consequently, some industry insiders speculate that the company may consider selling the second plant to a local Chinese firm. In a conference call held after last year’s third-quarter earnings announcement, SK Hynix CEO Noh Jong-won stated that the company is considering various scenarios, including selling the fab, selling the equipment, or bringing the equipment to Korea.