Commerce Department withholds approval for Dalian factory scale-up

China revenue seen as key to funding US investment plans

The US Commerce Department has yet to approve exports of American semiconductor manufacturing equipment needed for SK hynix's factory expansion in Dalian, China, putting the company's planned semiconductor factory investment in New York state in jeopardy. [Getty Images]
The US Commerce Department has yet to approve exports of American semiconductor manufacturing equipment needed for SK hynix's factory expansion in Dalian, China, putting the company's planned semiconductor factory investment in New York state in jeopardy. [Getty Images]

The US government has withheld export approvals for American semiconductor manufacturing equipment needed to expand SK hynix's factory in Dalian, China, throwing the company's plans to invest in a semiconductor facility in New York state into doubt.

Reuters reported Tuesday (local time), citing multiple sources, that SK hynix had applied for export licenses for US-made semiconductor manufacturing equipment required to expand production capacity at its Dalian factory, but the Commerce Department has yet to grant them.

Executives at Solidigm, SK hynix's US-based subsidiary, have held nearly 10 meetings with the Commerce Department since late August. At a meeting last week, Commerce Department Undersecretary Jeffrey Kessler maintained that he could not allow additional American semiconductor manufacturing equipment to be brought in for production capacity expansion or facility upgrades, sources said. The two sides are separately negotiating export licenses for equipment needed to operate the Dalian factory next year.

Sources said SK hynix's New York investment plans also hinge on whether the Dalian factory expansion is approved, as the company intends to fund its US investment using revenue generated by boosting the Dalian factory's productivity.

Solidigm is pursuing a $45 billion investment to build two NAND flash factories in Marcy, New York. The total investment could eventually reach $100 billion, sources said.

Reuters characterized the situation as a policy dilemma for the Trump administration — illustrating how far it can ease national security regulations on China to attract foreign investment and build semiconductor manufacturing capacity on US soil.


kate01@heraldcorp.com