Samsung, SK hynix shift chip strategy as U.S.-China rivalry reshapes Korea

Decisions about manufacturing and overseas expansion in strategic industries such as semiconductors are no longer driven by economics alone. As geopolitical developments increasingly shape business decisions, Korean manufacturers across the chip, auto and shipbuilding industries are weighing a growing set of risks in drawing global strategies. In this series, “Redefining Korea’s economic security in an era of U.S.-China rivalry,” the Korea JoongAng Daily examines how Korean companies navigate geopolitical pressures and realign their global supply chains. — ED.

China used to serve as a key consumer market and manufacturing hub for Korean companies, but the role has faded since the early 2020s amid the intensifying rivalry between Washington and Beijing, particularly in high-tech sectors including semiconductors.

With U.S. restrictions limiting investment and equipment upgrades in China, Korean chipmakers have explored and identified alternative production sites in the United States, Vietnam and Japan. 

Still, Samsung Electronics and SK hynix face a dilemma as pressure from both Seoul and Washington for more factories mounts even as uncertainty lingers over how long the memory chip boom will last.

‘Core national technology’

Korea classifies chips as a core national technology, and the government is keen to protect manufacturing information and keep operations at home. The Trump administration, however, has pressed the chipmakers to build more factories in the United States or face heavy tariffs. 

Samsung and SK hynix have already pledged 800 trillion won ($600 billion) to the Korean government to build a massive chip manufacturing cluster in the Jeonnam-Gwangju region. The investment is meant to keep pace with AI-driven chip demand and also to stimulate the rural economy outside the capital.

This investment is separate from the Yongin cluster in Gyeonggi, where the two companies are expected to spend up to a combined 1.6 quadrillion won.

Samsung Electronics’ Xi’an chip plant in China
SAMSUNG ELECTRONICS

For their part, the United States has been steering Samsung and SK hynix away from significant investments in their Chinese facilities by ending the validated end-user waiver in 2025. Samsung and SK hynix each operate a mix of memory chip production facilities using China’s relatively mature process technologies and testing and packaging facilities.

Before the termination, chipmakers were free to import controlled U.S. chip equipment without obtaining approval from U.S. authorities each time. However, now they have to renew their licenses annually to do so.

Because of the chip shortage driven by the AI boom, every facility counts, and Chinese operations cannot be ignored given the ecosystem and supply chain network the chipmakers have built there over the years along with cheaper labor. But with U.S. pressure growing, Samsung and SK hynix now are scouting other locations outside Korea, including the United States, Vietnam and Japan.

“We do not have any plans to expand capacity in China beyond our existing manufacturing base there,” an SK hynix spokesperson told the Korea JoongAng Daily. “The volume of our chip equipment imports to China is enough within the range of what the U.S. license allows us.”

A Samsung Electronics spokesperson echoed the view, saying the chipmaker does not have plans for significant investment in China.

“We will maintain our facilities in China, and some of our lines might go through updates or transitions, but that is the extent of it,” the spokesperson added.

A view of construction work on the new Samsung semiconductor plant, a memory chip testing plant, amid a global memory chip shortage, in Thai Nguyen province, Vietnam,on May 25.
REUTERS/YONHAP

Outside Korea and China, the two chipmakers are expanding overseas, diversifying their manufacturing footprints into the United States, Vietnam and potentially Japan.

Samsung and SK hynix are facing growing pressure from the Trump administration to produce their memory chips in the United States. Memory chips are critical components in AI accelerators from Big Tech companies such as Nvidia, Google, Microsoft and Amazon.

Samsung currently operates a foundry plant in Austin, Texas, and its first foundry factory in nearby Taylor is scheduled to go online next year, with a combined $37 billion going into the site. The company is also building a $4 billion chip testing and packaging factory in Vietnam.

Kwak Noh-jung, president and CEO of SK hynix, greets American veterans from the Korean War at a groundbreaking ceremony for an advanced packaging production facility for memory chips used in AI applications at Purdue University in West Lafayette, Indiana, U.S. on Aug. 27.
REUTERS/YONHAP

SK hynix, on the other hand, recently started construction on a $4 billion chip packaging factory in West Lafayette, Indiana. It is also looking at potential sites in Japan and the United States for further investments.

Samsung Electronics’ Taylor plant under construction
TAYLOR CITY

Beyond semiconductors, Korean makers of smartphones, displays, home appliances and cars have also been moving production out of China, once favored as a low-cost manufacturing hub.

Samsung Electronics closed its last remaining smartphone plants in Tianjin in 2018 and Huizhou in 2019, shifting production to Bac Ninh and Thai Nguyen in Vietnam and Noida in India. About half of its smartphones are now made in Vietnam. LG Display sold its LCD plant in Guangzhou, while LG Electronics listed its Indian unit and is building a third home appliance factory in the country. Mexico has also emerged as a base for exports to the U.S., with Kia, Samsung and LG all operating plants there.

India rises

Chipmaking is not the only industry caught in the geopolitical crossfire. Hyundai Motor Group, chastened by the erosion of its once-formidable position in China, has recalibrated its strategy around India, marshaling capital and production capacity in one of the world’s fastest-growing car markets.

The Korean automaker acquired a General Motors plant in Talegaon, Pune, in western Maharashtra, in 2023, and has invested 70 billion rupees, roughly $800 million, to overhaul the facility, which began mass production last October.

Hyundai will invest an additional $15.5 billion in India, mainly in hydrogen sectors to expand its business to buses, trucks and commercial vehicles after its Indian subsidiary went through an initial public offering worth $3.4 billion in October 2024, choosing India for the first public listing of any of its overseas subsidiaries.

Hyundai Motor’s Venue small SUV is manufactured at its plant in Talegaon, Pune, in the western Maharashtra.
HYUNDAI MOTOR

The pivot traces largely to a stunning reversal of fortune in China, one that has elevated India from a peripheral market to the linchpin of Hyundai’s strategy. Hyundai and Kia’s combined sales in China, which peaked at 1.8 million vehicles in 2016, dwindled to about 203,000 by 2024, primarily due to Beijing’s retaliation against Korea’s deployment of the Terminal High Altitude Area Defense missile defense system in 2017.

The group has dismantled much of its Chinese manufacturing plants, retaining only four of the eight plants it once operated, two each for Hyundai and Kia.

Its first Chinese factory in Beijing, with an annual capacity of 300,000 vehicles, was idled in 2019 and sold in 2021, while its Chongqing plant was off-loaded to a local buyer at the end of 2023. 

Their annual production capacity, once slated to reach 2.7 million vehicles, was cut to about 1.7 million in 2025. Hyundai Mobis, the parts maker under Hyundai, also sold its Chongqing factory, while HL Mando withdrew from the city in 2023, followed by steelmaker Hyundai Steel. 

India presents a starkly different picture; Since establishing its local subsidiary in 1996, Hyundai has built its annual sales in the country to roughly 600,000 vehicles. 

The Pune plant, which houses an engine plant, a proving ground and a training center alongside its assembly lines, has an annual capacity of 170,000 vehicles, which Hyundai plans to expand to 250,000 by 2028 and 320,000 by 2030. 

“Advanced economies, resetting their relationships with China, have come to see India as both an emerging market and a critical hub for diversifying their supply chains,” said Kim Kyung-hoon, who leads the India and South Asia team at the Korea Institute for International Economic Policy. “The Indian government has a strong appetite for industrial cooperation with Korea, given its manufacturing strength.” 

Industrial robots weld car bodies at Hyundai Motor’s plant in Talegaon, Pune, in western Maharashtra.
HYUNDAI MOTOR

With Pune now in full operation, Hyundai’s production capacity in India is approaching one million vehicles a year, including 824,000 at its two Chennai plants. 

Kia’s factory in Anantapur, with capacity of 431,000, lifts the group’s total to 1.43 million this year, and the completion of Pune’s first expansion phase in 2028 will put it on course for 1.5 million.

Pune has been producing the latest Venue, a compact crossover SUV that ranks among India’s most popular models, since October last year. A total of 121,294 Venues have been sold through August and have been exported to about 30 countries, including Mexico, Chile, South Africa and Saudi Arabia.

Hyundai said, however, it has not written off the Chinese market, as the company’s CEO José Muñoz in August pledged to restore annual sales there to 500,000 vehicles by 2030, a goal built around the China-specific Ioniq V and partnerships with local companies to tailor vehicles to Chinese tastes. 

Hyundai plans to follow with two electric SUVs in 2027, a compact and a midsize model, each offered in fully electric and extended-range versions.

Yet the target is more modest than it appears, as it counts exports. Hyundai intends to sell its China-developed Ioniq models in Asia Pacific, North America and the Middle East. 

The Elexio, an electric SUV introduced in China last year, has already arrived in Australia, where Muñoz said the reception had been “very positive,” prompting the company to consider a broader regional rollout.

“Also, we have the opportunity to hedge the risks that we have in other regions globally,” Muñoz said. “If [the Ioniq series] succeeds in China, we will [expand to] markets like Asia Pacific, Southeast Asia and potentially in Central and South America.”

BY LEE JAE-LIM, SARAH CHEA, PARK EUN-JEE   [chea.sarah@joongang.co.kr]

Update, Oct. 19: Updated quote from Samsung Electronics spokesperson.

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SK Hynix And Intel Explore US Memory Chip Manufacturing Deal

SK Hynix is reportedly exploring a deal with Intel that could bring memory-chip manufacturing to the United States for the first time. Reuters, citing three people familiar with the discussions, said the companies have discussed several structures, including SK Hynix leasing part of Intel’s Ohio semiconductor site or creating a venture with Intel and major cloud companies.

But this is not a signed deal. In its official clarification on 16 September, SK Hynix said it is reviewing ways to strengthen its global competitiveness while stressing that no specific arrangement with Intel and no US memory-production plan has been finalised.

SK Hynix Could Use Intel’s Ohio Megasite

The most direct option would put SK Hynix inside Intel’s long-delayed Ohio project. Reuters reported that the Korean memory company could lease part of the site, giving it manufacturing space without building an entirely separate US wafer fab from scratch.

A second possibility is more ambitious. SK Hynix, Intel and large cloud providers could form a joint venture, potentially giving customers that consume huge amounts of AI hardware a more direct route to securing memory supply.

The exact product is still unknown. SK Hynix makes DRAM, NAND flash and high-bandwidth memory, or HBM, but Reuters said it could not determine which memory technology would be produced in Ohio.

AI Has Turned Memory Into Strategic Infrastructure

That uncertainty matters because not all memory is equally important to the current AI boom. HBM sits close to accelerators such as Nvidia GPUs and feeds them data at extremely high speed, while conventional DRAM supplies working memory across servers, PCs and other systems.

The broader AI memory chip supercycle has made those components a central constraint in data-centre expansion. SK Hynix has also deepened its relationship with Nvidia through the wider SK Group AI infrastructure push.

We think that is the bigger story here. AI infrastructure is no longer only about who can design the fastest processor. Companies increasingly care about securing enough memory, packaging capacity and manufacturing space to keep those processors running.

Intel Could Gain A Major Customer For Ohio

For Intel, a deal could give its Ohio project a powerful outside customer at a useful moment. Intel says it plans to invest more than $28 billion in two leading-edge fabs at the site, but it slowed the timetable in 2025.

Under Intel’s latest published Ohio construction timetable, the first module is expected to begin operations between 2030 and 2031. The second is currently scheduled to start operating in 2032.

That means any SK Hynix arrangement would still be a long-term manufacturing move rather than a quick fix for today’s memory shortages.

The two companies also know each other well. In 2020, Intel agreed to sell its NAND memory and storage business to SK Hynix for $9 billion.

SK Hynix Already Has A US AI Memory Footprint

SK Hynix is not starting from zero in the United States. In August, the company broke ground on its Indiana AI-memory facility, which will package and test next-generation HBM and is expected to begin supplying US customers in the second half of 2029.

That distinction is important. Advanced packaging combines and stacks chips after core semiconductor dies have been manufactured. An Ohio agreement involving memory-chip fabrication could therefore move more of the production process onto US soil.

It also fits a wider reshaping of semiconductor geography. TSMC’s expanding US chip investment shows how more of the critical AI supply chain is being pushed toward American manufacturing.

South Korea Could Still Complicate The Deal

The biggest obstacle may come from Seoul. Reuters reported that South Korea’s trade ministry considers company investment decisions a matter for SK Hynix, but any transfer involving a “national core technology” could trigger a government review under the country’s Industrial Technology Protection Act.

That could become especially sensitive if the project involves advanced DRAM or HBM technology. SK Hynix has therefore kept its language cautious and says no decision has been made.

For South African readers, the near-term effect would be indirect. Local cloud providers, enterprises and AI developers buy into a global hardware market, so tighter or more diversified memory supply could eventually influence server availability and cloud infrastructure costs.

But with Intel’s Ohio production still years away, this is more about where the next wave of AI hardware gets built than about immediate price relief.

If the talks become a real deal, the most important detail to watch will be simple: what kind of memory does SK Hynix actually plan to manufacture in Ohio?

FAQs

Is SK Hynix Building A Memory Chip Factory With Intel?

Not yet. The companies are reportedly discussing several possible structures, but SK Hynix says no agreement has been finalised. One scenario could involve leasing part of Intel’s Ohio facility, while another could involve a joint venture.

What Kind Of Memory Chips Could SK Hynix Make In Ohio?

That has not been confirmed. SK Hynix produces DRAM, NAND and HBM, but Reuters said the specific technology involved in the talks remains unknown. Advanced HBM or DRAM production would be particularly significant because those technologies are strategically important to AI infrastructure.

Does SK Hynix Already Manufacture AI Memory In The US?

SK Hynix has begun building an AI-memory packaging and testing facility in Indiana. The company says it plans to supply next-generation HBM from the site starting in the second half of 2029. A separate Ohio manufacturing deal with Intel could expand its US footprint further if the talks lead to an agreement.

Temaz Tra

Temaz Tra is an AI and technology news writer focused on the fast-moving tools, platforms, and companies shaping the digital world. He covers artificial intelligence, consumer tech, cybersecurity, software, social media, and the wider impact of emerging technologies on work, business, and everyday life. With a focus on clear reporting and accessible analysis, Temaz helps readers understand complex tech developments without the jargon. His work connects breaking news with practical context, making it easier to follow how AI and digital innovation are changing the way people live, work, and interact online.

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SK Hynix Considers US NAND Factory as Trump Pushes Korean Chipmakers to Reshore Production

SK Hynix subsidiary Solidigm is considering building a NAND flash memory factory in the United States, with upstate New York emerging as a leading candidate, as pressure from the Trump administration pushes South Korean chipmakers to expand semiconductor production on American soil.

Three people familiar with the matter told Reuters that Solidigm is evaluating the potential project, which would be separate from discussions between SK Hynix and Intel over producing memory chips at Intel’s Ohio facility.

No final investment decision has been made, and key details of the proposed plant remain under discussion, one of the sources cautioned.

SK Hynix confirmed that Solidigm is examining options but said there was no specific project yet.

“Subsidiary Solidigm is reviewing various options to strengthen its business competitiveness, but no specific plans have been confirmed at this time,” SK Hynix said.

A U.S. manufacturing base would give Solidigm an alternative to its sole NAND production facility in Dalian, China. It could also reduce the company’s exposure to potential U.S. tariffs and restrictions on the export of semiconductor manufacturing equipment to China.

The potential investment comes as Washington intensifies efforts to bring semiconductor production back to the United States, particularly as the rapid expansion of AI data centers tightens global supplies of memory chips.

For SK Hynix, however, building in America presents a difficult cost calculation. Semiconductor production is generally more expensive in the United States than in South Korea, while Seoul and Washington are still negotiating the terms of South Korea’s broader investment commitments and trade relationship with the United States.

Solidigm Could Offer a Lower-Risk US Expansion

Solidigm’s NAND business is expected to provide SK Hynix with a politically easier path into U.S. manufacturing than relocating its most advanced memory technologies.

One of the sources said producing NAND through the U.S. subsidiary could encounter less resistance from Seoul because NAND is viewed as less strategically sensitive than advanced DRAM products, particularly high-bandwidth memory, or HBM, which has become a critical component of AI accelerators.

That has become a matter of interest as Washington and Seoul compete for semiconductor investment.

The South Korean government has been encouraging SK Hynix and Samsung to accelerate plans for a semiconductor manufacturing cluster in the country’s southwest, potentially involving investments worth hundreds of billions of dollars. At the same time, the Trump administration has been pressing Korean and Taiwanese semiconductor companies to expand U.S. manufacturing.

U.S. Commerce Secretary Howard Lutnick has threatened tariffs of up to 100% on South Korean and Taiwanese companies unless they commit to increasing production in the United States.

The pressure puts SK Hynix in the middle of competing industrial policies. Washington wants more chip manufacturing on American soil, while Seoul wants to preserve South Korea’s position as a global semiconductor manufacturing hub.

South Korean President Lee Jae Myung said Seoul would seek to “protect South Korea’s national interests while respecting the views of companies” when asked about pressure on Korean chipmakers to establish factories in the United States.

“It remains a matter of controversy,” Lee said Friday, without elaborating.

The issue is particularly sensitive because South Korea has already committed to a $350 billion investment package in the United States as part of an agreement aimed at securing lower U.S. tariffs.

China Is Expanding Its Memory Ambitions

The potential Solidigm investment also comes as Chinese semiconductor companies are moving deeper into the memory market.

Chinese chipmaker CXMT plans to establish an R&D production line for NAND flash memory at a new facility in Beijing, according to a Reuters report, as it seeks to enter a market dominated by Samsung, SK Hynix and Micron.

China’s push adds another layer of pressure on SK Hynix.

A U.S. plant could help Solidigm diversify its manufacturing footprint while providing some protection against geopolitical restrictions. But building capacity in America would take years and require substantial capital, making it difficult to know what the market will look like when the factory begins production.

That uncertainty is relevant for NAND, a market that has experienced prolonged cycles of oversupply, falling prices and weak profitability.

SK Hynix acquired Solidigm from Intel for $9 billion in 2020 and has since dealt with years of losses at the business following the extended downturn in NAND. The company is now looking for ways to improve Solidigm’s competitiveness. Last month, SK Hynix said it was considering measures to strengthen the unit after reports that Solidigm was exploring a pre-IPO fundraising of about 5 trillion won, or roughly $3.6 billion.

SK Hynix said at the time that no decisions had been made.

A U.S. factory could therefore serve several purposes at once: diversifying Solidigm’s manufacturing base, reducing its exposure to China-related trade restrictions, and giving SK Hynix a stronger position in the U.S. market.

But the economics remain uncertain.

Memory has become increasingly important to the AI infrastructure boom. DRAM provides the working memory used by processors, while NAND is primarily used to store data. The rapid construction of AI data centers has sharply increased demand for memory and put pressure on global supply chains.

SK Hynix has benefited heavily from the surge in demand for HBM, which is used alongside AI processors. That business is different from Solidigm’s NAND operation, but the broader AI infrastructure boom has created a more favorable environment for memory manufacturers.

However, there is concern about demand remaining strong enough to justify new U.S. capacity several years from now. The debate has become more complicated after concerns emerged over the pace of frontier AI development. Any meaningful slowdown in AI infrastructure investment could eventually affect demand for the memory and storage components used in data centers.

SK Hynix’s shares nevertheless rose 6.4% on Friday, compared with a 2.7% gain in the benchmark KOSPI index, as investors responded to broader semiconductor developments.

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SK Hynix and Intel Shares Rise Following Report of US Memory Chip Manufacturing Talks

Shares in SK Hynix (NASDAQ:SKHY) and Intel (NASDAQ:INTC) rose on Wednesday following a report that the two companies were discussing a potential agreement to manufacture memory chips in the United States.

Reuters reported, citing three people familiar with the discussions, that the proposed arrangement could establish SK Hynix’s first US memory chip production operation.

One option under consideration would involve SK Hynix leasing part of Intel’s planned semiconductor manufacturing facility in Ohio. Another possibility is a joint venture involving the two chipmakers and major cloud computing companies seeking to secure memory supplies.

The discussions remain preliminary, and no agreement has been reached.

“While the company is reviewing various measures, including establishing additional production bases, to strengthen the competitiveness of its memory business, no matters have been determined at this stage,” an SK Hynix spokesperson told Investing.com.

Intel did not immediately respond to a request for comment.

Shares Advance in South Korea and US Premarket Trading

SK Hynix shares gained 2.7% to 1,735,000 won in South Korean trading, compared with a 1% increase in the broader KOSPI index.

At 08:14 GMT, the company’s US-listed shares were up 2.9% in premarket trading, while Intel shares had risen approximately 5%.

The companies have not determined which types of memory chips could be manufactured at the Ohio facility, according to Reuters.

SK Hynix produces DRAM and NAND flash memory and is a major supplier of high-bandwidth memory (HBM), which is used in artificial intelligence processors.

Potential Production Plans Could Face South Korean Regulatory Review

Any proposal to manufacture advanced memory products, including HBM or DRAM, in the United States could face regulatory scrutiny in South Korea because the technologies are considered sensitive, according to the sources cited by Reuters.

South Korea’s trade ministry said the decision would rest with SK Hynix, although projects involving nationally important technologies could be reviewed under the country’s Industrial Technology Protection Act.

The potential regulatory requirements add another consideration to the proposed manufacturing arrangement, alongside the commercial and operational terms that remain unresolved.

AI Demand Drives Interest in Additional Manufacturing Capacity

The discussions come amid increased demand for memory chips used in artificial intelligence systems and data centres.

The United States has been encouraging semiconductor manufacturers to expand domestic production, while SK Hynix faces requests from customers and governments to increase its US manufacturing presence.

Manufacturing costs in the United States are significantly higher than in South Korea, creating an additional consideration for any proposed investment.

SK Hynix recently completed a secondary listing on Nasdaq and is constructing a semiconductor packaging facility in Indiana.

In July, Chairman Chey Tae-won said the company needed to establish a US factory if possible.

Intel’s Ohio Project Remains Under Development

Intel has committed to developing its semiconductor manufacturing site in Ohio, although construction delays have pushed the planned commencement of production to 2030 and 2031.

A potential arrangement with SK Hynix could provide an additional use for the facility and help reduce some of Intel’s financial burden associated with the project, Reuters reported.

However, the companies have not announced a transaction, confirmed a production plan or specified a timetable for any potential partnership.

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