Inc., an American subsidiary of the South Korean memory-chip maker SK Hynix Inc., is in talks with the US Commerce Department to invest $45 billion in a new US chip plant, according to people familiar with the negotiations.

Before it decides to move ahead with what would be the first new major flash-memory chip production facility on American soil, Solidigm wants the US government’s permission to send equipment to China to upgrade an existing plant there, the people said, asking not to be identified discussing private matters. Solidigm has told US officials that enhancing the plant in Dalian, China, would speed up the development of a new US site by helping to finance it, the people said.

The proposal highlights the complexities of the US government’s efforts to revive domestic manufacturing of critical electronic components, an effort that successive administrations in Washington have prioritized for national security reasons. Those same security concerns have driven the US to take an increasingly harder line on exports of US chip technology to China, an attempt to hold back the Asian nation’s abilities to produce its own semiconductors.

Solidigm is planning enhancements of technology used at the location in China that would be transferable to the new US plant, the people said. But Solidigm needs the US government’s permission to ship new chip machinery to Dalian to make improvements and generate more money from its operations there, which are focused on manufacturing so-called Nand flash memory, a type of chip used to store information in everything from smartphones to data centers.

Deliberations on the US investment are continuing in the wake of SK Hynix’s decision last week to scrap its plans for a possible $10 billion initial public offering for Solidigm after facing stiff opposition from regulators and shareholders.

Solidigm has told the Commerce Department that the increase in sales from the Dalian plant would directly help to pay for the US factory, people familiar with the situation said. The firm has also told the Commerce Department that the total investment in the US plant may approach $100 billion over time, the people said. It has considered states including New York for the new US plant, which could begin construction next year, one of the people said.

The vast majority of flash memory chips are produced in Asia, though Micron Technology Inc.’s older factory in Manassas, Virginia, also makes the semiconductors, according to a company website. US Commerce Secretary Howard Lutnick has called on Solidigm parent SK Hynix and its rival Samsung Electronics Co. Ltd. to expand memory-chip production in the US.

The US has broadly restricted sales of chips and the tools needed to make them to China, but it has granted exceptions to plants in the country run by Korean companies Samsung and SK Hynix, as well as Taiwan Semiconductor Manufacturing Co. Last year, the Trump administration signaled that it was eager to further restrict, rather than loosen, those allowances by ending an agreement struck under President Joe Biden that allowed companies to send some equipment to China on an as-needed basis.

In August 2025, the Commerce Department’s Bureau of Industry and Security, which oversees US export controls, revoked the so-called validated end-user agreements that allowed Samsung and SK Hynix to import certain tools for their China facilities. Under Secretary of Commerce Jeffrey Kessler, who runs BIS, called the previous agreements a “loophole” and ultimately replaced them with annual approvals that require the companies to seek US permission for a year’s worth of restricted equipment at a time.

It wasn’t immediately clear whether Kessler or Lutnick have voiced support or disapproval of Solidigm’s proposal. Since Solidigm is owned by a Korean company, a new US plant could count toward the hundreds of billions of dollars that South Korea has pledged to invest in the US. Spokespeople for BIS didn’t respond to a request for comment.