[Edaily Reporter SOYEON KIM ] SamsungElectronics and SK hynix are set to begin upgrading the manufacturing processes at their NAND flash factories in China. This strategy aims to enhance their technological competitiveness and profitability through the production of high-layer-count NAND in response to the competition from China’s Yangtze Memory Technology (YMTC).

According to industry sources on the 21st, SamsungElectronics is moving forward with the production of 286-layer 9th-generation (V9) NAND flash at its Xi’an Plant 2 in China. Since 2023, SamsungElectronics has been working to transition the production line for 128-layer 6th-generation (V6) NAND—the mainstay of the Xi’an plant—to the 236-layer 8th-generation (V8) process. This transition to V9 is also intended to upgrade the processes at existing production facilities. SamsungElectronics explained that it is proceeding with the related investments in consultation with the U.S. government while complying with U.S. export restrictions on semiconductor equipment to China.

SK hynix is also expanding production capacity at its Dalian plant in China. Solidigm, a subsidiary of SK hynix, is producing NAND flash at the Dalian plant it acquired from Intel and is currently in the process of introducing additional equipment. SK hynix broke ground on its second Dalian plant in 2022, the year following the acquisition, and completed construction in 2023; however, it had postponed the installation of equipment due to the memory market downturn at the time. It is reported that the company has recently received approval from the U.S. government and is installing equipment for NAND production in unused space.

Domestic memory companies are moving to upgrade their production facilities in China to enhance production efficiency and cost competitiveness by utilizing existing equipment. Converting older NAND production lines to high-layer-count processes increases the memory capacity that can be produced from a single wafer, thereby improving productivity. In particular, as U.S. export restrictions on semiconductor equipment to China limit local investment, it is becoming increasingly important to maximize the use of existing production facilities.

The rapid catch-up by Chinese companies is also cited as a reason for accelerating process upgrades. According to market research firm Omdia, SamsungElectronics’ market share in the global NAND flash market stood at 28.1% in the second quarter of this year. This marks a decline from the over 30% market share it held in 2024 and 2025 to the 20% range. In contrast, YMTC has been steadily expanding its market share, rising from 8% in 2024 to 10.7% last year, 14.0% in the first quarter of this year, and 14.2% in the second quarter.

In the Chinese market, a reversal in market share has already occurred. In the second quarter of this year, YMTC’s share of the Chinese NAND market reached 38.7%, surpassing SamsungElectronics (33.4%). As Chinese companies rapidly expand their presence based on their domestic market, the likelihood that they will erode the market share of Korean companies in the global market is increasing.

Looking solely at the Chinese market, Yangtze Memory has already surpassed SamsungElectronics. As of the second quarter of this year, SamsungElectronics’ market share in China stood at 33.4%, while Yangtze Memory’s reached 38.7%.

In particular, NAND flash is considered an area where Chinese companies can narrow the technology gap relatively faster than with DRAM. While DRAM relies on circuit miniaturization and precise process control, NAND has evolved primarily through high-stacking technology, which involves vertically stacking memory cells. Kim Hyung-jun, head of the Next-Generation Intelligent Semiconductor Business Division (Professor Emeritus at Seoul National University), explained, “China’s pursuit in NAND is very close,” adding, “There is only a one- to two-year gap compared to South Korean memory manufacturers.”

An industry official explained, “As demand for NAND is growing rapidly in the age of artificial intelligence (AI), domestic memory companies have no choice but to work on streamlining their Chinese factories and improving profitability,” adding, “They are looking for ways to maximize the use of local production facilities while complying with U.S. regulations targeting China.”