SK Hynix unit Solidigm is in talks with the US Commerce Department to invest $45 billion (£33.8bn) in a new US chip plant, but is making the plans contingent on US permission to upgrade the equipment at an existing plant in Dalian, China, Bloomberg reported.

The upgrades to the Dalian facility, which manufactures NAND flash memory, would involve technology that would be transferable to the new US plant, and would help to finance the US site, the report said, citing unnamed people familiar with the matter.

The US plant would be a significant win for the US administration, representing a major new flash memory chip production facility in American territory.

US manufacturing

But the negotiations, some elements of which were also reported by Reuters, highlight the complexities of policymaking as the US tries to build up onshore chip manufacturing, while also restricting the chip tools that can be sent to China.

SK Hynix last week cancelled plans for a $10bn IPO for Solidigm, which was formerly Intel’s memory-manufacturing unit, amid resistance from its own shareholders and regulators.

Tighter controls

The US has imposed restrictions on the export of chip manufacturing tools to China, with exceptions for plants operated in the country by SK Hynix, Samsung Electronics and TSMC.

In August of last year, the Commerce Department’s Bureau of Industry and Security tightened controls on what those three companies can send to their Chinese plants, requiring them to apply to the US annually for specific equipment upgrades.