Solidigm ties $45B US plant to China fab upgrade

Solidigm, the US subsidiary of South Korean memory maker SK Hynix ↗ 1.92%, is in talks with the US Commerce Department about investing $45 billion in a new American chip plant, Bloomberg reported on Tuesday, citing people familiar with the negotiations. There is a condition. Before committing to what would be the first major new flash-memory factory built in the United States, Solidigm wants Washington's permission to send equipment to China to upgrade its existing plant in Dalian.bloomberg.com

The company has told US officials that upgrading Dalian would help pay for the US site and get it built faster, according to Bloomberg. Solidigm also said its US investment could eventually reach close to $100 billion. New York is one of the locations under consideration, and construction could start in 2027, Stocktwits reported via Yahoo Finance, citing the Bloomberg report. Solidigm declined to discuss its talks with the government but confirmed it is looking at sites around the world for a new NAND plant. No final decision has been announced.finance.yahoo.com+1

The Dalian question

Reuters first reported on October 15 that SK Hynix was making a new US factory contingent on an export license for more US equipment at Dalian. Solidigm wants to equip Mod B, a building finished in 2023 that was left partly empty during a memory-market downturn. The Dalian plant uses tools from Lam Research ↗ 1.41%, Applied Materials ↗ 2.15% and KLA ↗ 2.98%. Commerce revoked the exemptions that SK Hynix and Samsung held for their China plants last year, calling them a "Biden-era loophole." It also said it did not expect to approve equipment that would expand capacity or upgrade technology, Reuters reported. SK Hynix's current license, which caps the amount of equipment it can bring in, expires at the end of 2026, and no license for 2027 has been issued.reuters.com

SK Hynix told Reuters that it is installing equipment with input from US authorities and is not trying to expand the facility's capacity. Dalian is the only plant in the world that makes the company's 192-layer floating-gate 3D NAND, which goes into data center SSDs, Asia Times noted.asiatimes.com

Funding gap after IPO retreat

The talks come days after SK Hynix dropped plans for a US listing of Solidigm. On October 23, the company said it had stopped reviewing both a pre-IPO round and an IPO, citing capital market conditions, Yonhap reported. South Korean regulators had warned that the offering could break the country's rules on duplicate listings, CNBC reported. Bloomberg had previously put the planned IPO at about $10 billion.cnbc.com+2

SK Hynix said Solidigm's investment needs have not changed and that it is weighing other ways to raise the money, including direct investment, Seoul Economic Daily reported. Solidigm was created when SK Hynix bought the NAND business of Intel ↗ 3.61% in 2021, Korea JoongAng Daily noted. Investors will be watching for funding details when SK Hynix reports third-quarter results on Wednesday, October 28, investingLive reported.koreajoongangdaily.com+2