When SK hynix acquired Intel's NAND business, China imposed conditions on its enterprise SSD (eSSD) operations that will hit their five-year mark in December 2026. But the restrictions won't disappear automatically at that point. SK hynix must apply for relief, and China's State Administration for Market Regulation (SAMR) must review competitive conditions in the market before granting it. Compliance with the conditions continues until then. Moreover, what lifting the conditions would change is pricing and sales practices in China — whether U.S.-made equipment can be brought into the Dalian plant is decided through an entirely separate review.
Korea's Dealsite reported on this milestone based on SK hynix's semiannual report. The timing draws attention because demand for AI data-center storage is rising, and reports suggest the company is considering restarting its second Dalian fab. If China's conditions were lifted, the company could more easily capture profit. But that wouldn't necessarily mean an immediate increase in NAND supply.
Six conditions that don't expire after five years
In December 2021, SAMR conditionally approved SK hynix's acquisition of Intel's NAND and SSD business. China's approval came with six conditions. Alongside obligations on pricing, production increases, and supply, there are requirements for fair sales practices, support for competitors, and a ban on coordination with rivals. Even after five years pass, compliance with all the conditions continues until SAMR grants relief.
| Condition | What SK hynix must do | Effect on the business |
|---|---|---|
| Pricing | If trading terms are comparable, keep prices for PCIe and SATA eSSDs sold in China at or below the 24-month average before the decision took effect | Prevents price hikes even when market conditions improve |
| Production increase | Continuously increase production of PCIe and SATA eSSDs for five years after the decision takes effect | Prevents supply restriction to drive up prices |
| Supply | Continue supplying all products to China on fair, reasonable, and non-discriminatory terms | Prevents selective supply restriction targeting certain customers |
| Sales practices | Ban forced exclusive purchasing and bundling with other products | Prevents lock-in strategies using the combined post-acquisition product lineup |
| Support for competitors | Help third parties enter the PCIe and SATA eSSD market | Compensates for reduced competition caused by the acquisition |
| Ban on coordination | No coordination with major Chinese competitors on price, production volume, or sales volume | Prevents restriction of competition over price, production, and sales volume |
The pricing condition in this table deserves particular attention. It doesn't apply to NAND overall — only to PCIe and SATA eSSDs sold into China. As long as trading terms are comparable, prices cannot exceed the 24-month average before the 2021 decision took effect. This condition may not stand out much when market prices are falling sharply, but in a supply-constrained environment where prices are rising, it directly narrows the seller's profit opportunity.
SAMR's decision text states that relief "can be applied for" five years after the decision takes effect. SAMR makes the determination, based on competitive conditions in the market at the time of the application. SK hynix's 2026 semiannual report describes the same procedure. As of September 2, it has not disclosed whether or when it will apply.
AI demand growth has made the price cap heavier
The enterprise SSD market has moved in the opposite direction from where it stood in 2021, when the conditions were accepted. SK hynix explained that in the second quarter of 2026, NAND demand driven by AI infrastructure investment exceeded supply capacity, and sales of high-value-added products such as eSSDs contributed to record profits. According to TrendForce estimates, the top five companies' eSSD revenue that quarter reached $37.59 billion, up 103.6% from the previous quarter. SK hynix and Solidigm's combined total exceeded $8.63 billion, ranking second.
In its U.S. listing application, SK hynix stated that the obligation to maintain a reasonable pricing policy in the Chinese eSSD market limits its ability to significantly raise prices on NAND products sold in China in 2026. While the legal condition applies specifically to PCIe and SATA eSSDs, the company presented it to investors as a risk affecting the entire NAND business. The effect of lifting the conditions could show up in average selling prices and customer-specific contracts before it shows up in factory production volumes.
This also overlaps with the original rationale for the acquisition. When SK hynix announced it would acquire the business for $9 billion in 2020, it wasn't just Intel's NAND manufacturing assets — it included SSD design capability, personnel, and the customer base. Today, Solidigm sells the D5-P5336, which uses 192-layer QLC NAND and reaches up to 122.88TB capacity, targeting read-intensive use cases in AI data infrastructure. As the value of high-capacity products rises, a condition that caps prices only in China makes it harder to adjust product mix and profitability.
However, lifting the conditions wouldn't guarantee unrestricted price increases. Long-term customer contracts, competitors' bid pricing, and product certification requirements would remain. What would change is the ability to consider proposals aligned with market prices, without a regulatory ceiling.
Measuring 2020's competitive assessment against 2026
The market SAMR examined in 2021 was highly concentrated. In China's 2020 SATA eSSD market, the combined share of SK hynix and the Intel business being acquired was 55–60%; for PCIe eSSD, it was 50–55%. Globally, the combined shares reached 30–35% for SATA and 40–45% for PCIe.
The number of competitors was also small. According to SAMR, the acquisition reduced the number of major players in the global SATA eSSD market from four to three, with the combined share of those three exceeding 90%. In PCIe, the number dropped from three to two, with the two companies holding over 80% combined. Because data-center customers take a long time to certify products for quality and stability, a new manufacturer simply being capable of producing NAND doesn't make it an effective competitor. That's why SAMR imposed a price cap and a production-increase requirement, and even required support for third-party market entry.
Five years later, Chinese players are now in the picture. Dealsite reported, citing Counterpoint Research estimates, that YMTC's global NAND revenue share rose from 8% in the first quarter of 2025 to 13% in the first quarter of 2026. This growth could factor into SAMR's determination on whether to grant relief.
However, those figures of 8% and 13% cover the global NAND market as a whole — not the share of certified products specifically in China's PCIe and SATA eSSD market. What SAMR is examining is whether customers can actually choose alternative suppliers in the two specific markets flagged as problematic in 2020. The fact that Chinese companies have increased NAND shipments and the fact that they have become competitors capable of disciplining prices in the enterprise SSD market are two separate things that need to be verified independently.
China's relief and U.S. equipment approval are separate matters
Relief from China's conditions would make it easier to adjust SSD pricing and sales practices, but it wouldn't substitute for U.S. export approval, nor would it guarantee expanded production or technology upgrades at Dalian. The two systems differ in both purpose and scope.
| Gate | Decision-maker | Scope | What passing unlocks |
|---|---|---|---|
| China's merger conditions | SAMR | eSSD pricing, supply, and sales practices in the Chinese market | Freedom in price-setting and customer contracts |
| U.S. export controls | U.S. Commerce Department's Bureau of Industry and Security (BIS) | U.S.-origin manufacturing equipment and technology shipped to Chinese plants | Scope of equipment available for maintaining, expanding, or upgrading Dalian operations |
In 2025, BIS removed Intel's Dalian facility, along with Samsung's and SK hynix's plants in China, from the Validated End-User (VEU) program. This eliminated the general license mechanism for bringing in covered items, making export licenses mandatory. BIS has indicated it intends to approve applications necessary for operating existing facilities, while also stating it will not issue licenses for equipment used to expand production or upgrade technology.
This boundary is directly relevant to plans for the second Dalian fab. Seoul Economic Daily reported a plan to bring in equipment starting in November 2026 and establish mass production capability in the first half of 2027. The additional capacity would be 50,000 wafers per month, a 50% increase from the existing roughly 100,000 wafers to about 150,000. SK hynix has not officially confirmed this timeline or capacity figure, nor has it disclosed which equipment would be subject to U.S. licensing requirements.
Therefore, even if China's conditions are lifted, that wouldn't determine whether equipment arrives in November or mass production begins in 2027. Conversely, even if equipment approval is obtained, if SAMR's conditions remain in place, eSSD pricing and sales practices in China would continue to be restricted. The two are independent constraints. Relief from China's conditions would expand pricing freedom without increasing production capacity, while U.S. equipment approval would enable production facilities to operate without removing pricing and sales restrictions in China.
Dalian's profitability conditions that remain even after relief
If relief is granted, the first thing SK hynix would gain is room to bring pricing management of its China eSSD business closer to market conditions. It would become easier to direct supply toward high-capacity AI-oriented products and restructure pricing and volumes on a customer-by-customer basis. This would expand the range of management options for connecting the acquired SSD business's product technology with Dalian's manufacturing capacity.
Even so, an investment decision on the second Dalian fab requires confirmation on three fronts: which conditions Chinese authorities actually lift; how much equipment for production expansion BIS approves; and whether the AI-driven NAND supply shortage and price levels persist even after equipment is installed. The reported mass-production timeline for the first half of 2027 is not a plan SK hynix has confirmed, and the scope of equipment approval remains unknown.
The checkpoint in December isn't simply "whether five years have passed." It's whether SK hynix applies, and whether Chinese authorities determine there is sufficient competition in China's PCIe and SATA eSSD markets. Meanwhile, equipment approval for Dalian proceeds on a separate timeline and under separate criteria. Relief from the conditions and equipment approval are not prerequisites for each other. The combination of what pricing is achievable in China and what volume of product can actually be manufactured at Dalian will be the key factor determining the profitability of the business acquired from Intel.