Following a 70% quarterly surge in NAND flash memory prices, SK hynix is moving forward with plans to restart the previously suspended second-phase expansion of its Dalian factory, targeting a 2026 timeline for a new V8 (238-layer) production line. This decision, prompted by a historic price recovery, marks a strategic shift to convert market strength into tangible production capacity.
The company is set to begin installing manufacturing equipment at the Dalian Phase II facility in the second half of this year, with construction expected to be completed in phases by the first half of 2027. Domestic partners have reportedly started relocating idle NAND equipment to the site, and overseas suppliers have received preliminary purchase orders for equipment delivery.
Key Details on Production Capacity
The Dalian Phase II expansion will introduce a new V8 (238-layer) production line, targeting a monthly output of 30,000 to 50,000 wafers. Concurrently, the existing Phase I facility is undergoing a deep conversion to 192-layer NAND technology and replacing aging equipment.
Reasons for the Project's Revival
The project's initial suspension was attributed to prolonged market weakness and uncertainties surrounding U.S. export controls on semiconductor equipment bound for China. A significant change has occurred on the regulatory front, with the U.S. shifting from a "Validated End-User" (VEU) system to an annual approval process for equipment shipments, thereby reducing supply chain uncertainty and creating the operational clarity needed for SK hynix to proceed.
This regulatory shift is timely, as the market observes whether the company can leverage the current boom in DRAM and High Bandwidth Memory (HBM) to further extract value from its $8 billion acquisition of Intel's NAND business through this Dalian expansion. The Dalian site is viewed as the location with the fastest potential expansion speed within SK hynix's NAND manufacturing footprint.
Market Conditions Driving the Decision
The timing of the restart is strategic. In the first quarter of 2026, the average selling price for SK hynix's NAND products surged by over 70% quarter-over-quarter, setting a historical record for a single quarter. The company's guidance for the second quarter further indicates a rebound, with NAND shipments expected to shift from decline to sequential growth. This dual improvement in pricing and volume provides a solid foundation for resuming previously shelved capital expenditure plans.
Investment data underscores this commitment. SK hynix's investment in its Dalian NAND manufacturing subsidiary for 2025 increased by 52% year-over-year to 440.6 billion won, indicating an acceleration in NAND-related spending even before the formal Phase II restart.
On the technology roadmap, SK hynix has completed production verification of its 375-layer 3D NAND flash, slated for mass production at its Cheongju M15 plant in South Korea by year-end. The Dalian V8 (238-layer) line will form a technological gradient, serving different market segments.
Intensifying Rivalry with Samsung
SK hynix is not the only memory giant expanding NAND capacity in China. Samsung Electronics is also accelerating the upgrade of its Xi'an factory's NAND production. Samsung completed the production line conversion from 128-layer V6 to 236-layer V8 technology on March 30 and is now entering mass production.
Investment figures confirm this trend. Samsung's investment in its Xi'an NAND plant for 2025 is estimated at approximately $304 million, representing a year-over-year increase of about 67.5%. The simultaneous capacity expansion by South Korea's two leading memory chipmakers in China signals that the global NAND supply side is transitioning from a contraction cycle to an expansion phase.
From a timing perspective, Samsung's Xi'an V8 production has already commenced mass production, while SK hynix's Dalian Phase II V8 equipment installation is slated to begin in the second half of the year, creating a gap of several quarters in the actual ramp-up of new capacity between the two competitors.
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