SK hynix restarts Dalian NAND fab, boosting China output 50%

SK hynix is restarting a stalled NAND fab in China to capture surging AI-driven enterprise SSD demand.

SK hynix will restart its stalled Dalian NAND plant in China, expanding output 50 percent to 150,000 wafers per month as AI data center demand drives enterprise SSD prices up nearly tenfold in a year.

"The second Dalian plant will be equipped with the same equipment as the existing first plant," an industry official said, adding that wafer input capacity is estimated at 40,000 to 60,000 wafers per month.

Solidigm, SK hynix's NAND subsidiary, resumed investment in the second Dalian plant during the first half of this year after construction stalled in 2022 when a memory downturn and U.S. restrictions on chip equipment exports to China froze the project. Equipment installation begins as early as November, with mass production targeted for the first half of next year. The new line adds roughly 50,000 wafers per month to the existing 100,000-wafer capacity at Dalian's first plant.

The expansion follows SK hynix's board approval of 54.3 trillion won ($38.1 billion) in new fab investments — 35.2 trillion won for the Yongin Y2 DRAM/HBM facility and 19.1 trillion won for the Cheongju M17 NAND fab. The company is splitting production between Dalian for mature 100-layer floating-gate NAND and Cheongju for advanced 300-plus-layer products, competing against Samsung, Micron, and Kioxia in the premium NAND segment.

Dalian's Second Act After Four-Year Pause

SK hynix acquired Intel's NAND business in 2021, launching Solidigm and taking over the first Dalian plant and its site. Construction of the second plant began in May 2022 but stalled when the memory downturn reduced the need for additional capacity, leaving the facility as little more than a bare structure. U.S. export controls on advanced chipmaking equipment further complicated the project's trajectory.

The economics have since flipped. Enterprise SSD demand from AI data centers has driven NAND prices up nearly tenfold over the past year, making the previously shelved investment economically viable again. The Dalian expansion is part of a two-track strategy: Dalian will focus on lower-layer NAND based on Intel's mature floating-gate cell design, while Cheongju's M17 fab — with its first cleanroom opening at the end of 2028 — will handle 300-plus-layer high-stack NAND.

Cheongju M17 Anchors the High-End Push

SK hynix's 19.1 trillion won investment in Cheongju M17 targets advanced NAND products for AI inference workloads, including KV caches that store previously generated vectors during inference to reduce repetitive computation. The company expects NAND applications to expand further as agentic AI and physical AI become more prevalent.

The Cheongju campus already operates M11, M12, and M15 NAND fabs, and the new facility will integrate with existing infrastructure to improve manufacturing efficiency. Construction begins in February 2027, with the first cleanroom opening in December 2028 and phased investments continuing through April 2031.

SK hynix's American depositary receipts rose nearly 1 percent in pre-market trading following the Dalian news. The ADR is down 20 percent year-to-date, while the Roundhill Memory ETF has gained 84 percent over the past 12 months and the iShares Semiconductor ETF is up 118 percent. The capacity expansion confirms the strength of the AI infrastructure demand cycle, though SK hynix's stock performance suggests investors remain cautious about the pace of the memory recovery.

This article is for informational purposes only and does not constitute investment advice.