Samsung and SK Hynix Pour $1.5 Billion Into China NAND Upgrades, Driving Surge in Deposition and Etch Equipment Demand

By NineScrolls Team · 2026-03-31 · 4 min read · Industry

Samsung Completes 236-Layer Transition at Xi'an

Samsung Electronics has completed the first phase of its process transition at its Xi'an NAND flash plant in Shaanxi province, fully phasing out legacy 128-layer (V6) technology and ramping mass production of 236-layer (V8) 3D NAND. The Xi'an facility accounts for roughly 40% of Samsung's total NAND output, making this upgrade one of the largest single-site technology transitions in the memory industry this year.

The company is not stopping at V8. Samsung's Xi'an Phase 2 (X2) facility is set to transition to 286-layer (V9) NAND, with full-scale production targeted by the end of 2026. The aggressive roadmap is driven by insatiable demand from AI workloads and enterprise SSDs, as well as competitive pressure from Chinese NAND manufacturers like YMTC advancing their own layer counts.

SK Hynix Eyes Dalian Phase 2 Restart

SK hynix is preparing to restart equipment installation at its Dalian Phase 2 plant in Liaoning province during the second half of 2026. The Dalian fab currently operates on 192-layer technology — trailing SK hynix's leading-edge 321-layer node by more than two full generations. The company is weighing production of mid-200-layer NAND at the facility to close the gap.

Dalian Phase 2 is effectively SK hynix's only available site for expanding NAND capacity given constraints at its other facilities. The restart is driven by a NAND price recovery and what analysts describe as DRAM and NAND supplies being "effectively sold out" in 2026. SK hynix's Dalian operations currently turn out approximately 100,000 wafers per month.

China Investment Surge: $1.5 Billion and Counting

Combined 2025 capital expenditure at Samsung and SK hynix's China facilities exceeded 1.48 trillion won (approximately $1.5 billion), according to TrendForce data published on March 27. Samsung's Xi'an spending hit 465.4 billion won — a 67.5% year-over-year increase. SK hynix's combined Wuxi and Dalian investment surpassed 1 trillion won for the first time since 2022, with Wuxi alone up 102% to 581 billion won and Dalian rising 52% to 440.6 billion won.

SK hynix's equipment investment in its Chinese semiconductor plants grew tenfold in 2025, with approximately 90% concentrated at the Wuxi DRAM plant for its 1z-to-1a process node upgrade targeting DDR5 production. Samsung's Xi'an subsidiary posted 2025 annual revenue of approximately 8.64 trillion won with net profit of 1.11 trillion won — a clear sign the facility is generating returns that justify continued upgrades.

What This Means for Deposition and Etch Equipment

Every additional layer in a 3D NAND stack requires its own thin film deposition and plasma etch cycles. The jump from 128 layers to 236 layers does not simply double the equipment workload — it compounds it. Higher layer counts demand higher-aspect-ratio etching (current 236-layer devices require approximately 70:1 or greater aspect ratios), longer deposition sequences for alternating oxide-nitride film stacks, and tighter uniformity control across the entire wafer.

Lam Research, a key etch equipment supplier, has noted that current technologies enabling 232-layer production "are not capable of getting us to 1,000 layers without new breakthroughs." The path forward depends on advances in plasma etch tools capable of maintaining critical dimensional consistency across increasingly tall memory stacks, as well as CVD and ALD systems that can deposit uniform films at extreme aspect ratios.

The global semiconductor etch equipment market was valued at $14.51 billion in 2024 and is projected to reach $28.26 billion by 2032 at an 8.7% CAGR, according to a Verified Market Research report published on March 26. 3D NAND layer scaling is one of the primary drivers. Applied Materials, Lam Research, and Tokyo Electron — the three largest etch and deposition equipment suppliers — all project double-digit or near-double-digit revenue growth for Q1 2026, with memory equipment demand leading the way.

Export Controls Add Complexity to Equipment Supply

These upgrades operate under tightening U.S. export controls. Washington removed Samsung and SK hynix's "verified end-user" status in August 2025, replacing it with annual license approvals for chipmaking tool shipments to their China plants. The newly granted 2026 licenses cover the calendar year, but the annual review cycle introduces uncertainty for long-term equipment procurement planning.

Building new fabs typically takes three to five years, making existing facility upgrades the fastest path to additional capacity. For the equipment supply chain — plasma sources, sputtering targets, vacuum components, gas delivery systems, and process monitoring instruments — the Samsung and SK hynix China upgrades represent a near-term demand signal measured in billions of dollars, concentrated on deposition and etch tools needed to push 3D NAND past 200 layers and toward 300.