SK Hynix Inc. (000660), the South Korean memory chip giant and a key supplier to Nvidia Corp. (NVDA), is weighing a potential stake sale in its semiconductor packaging and testing facility in Chongqing, China, as it seeks to unlock capital and accelerate growth, according to people familiar with the matter.

The company is in early-stage discussions with prospective advisors to review options for the back-end manufacturing site, which could be valued at approximately $3 billion if a transaction proceeds, the people said, asking not to be identified because the deliberations are private. Talks with Chinese funds and industry players are preliminary, and there is no guarantee a deal will be reached. SK Hynix may retain a minority stake in the operation even if it brings in a new investor.

Established in 2013, the Chongqing plant packages and tests dynamic random-access memory (DRAM) and NAND flash chips. It serves as a large-scale back-end production base that supports the company’s global NAND output. The facility does not manufacture wafers — the front-end process of chipmaking — but rather handles the final stages of preparing chips for shipment to customers.

China remains a critical manufacturing hub for SK Hynix. The company also operates a DRAM fabrication plant in Wuxi and a 3D NAND facility in Dalian through its subsidiary Solidigm. The Chongqing review comes as the chipmaker navigates a complex geopolitical landscape, with the United States tightening export controls on advanced semiconductor technology to China. A partial divestiture could allow SK Hynix to share the financial burden of maintaining and upgrading the site while preserving access to China’s vast electronics supply chain.

The Chongqing deliberations were reported just one day before SK Hynix unveiled a massive domestic investment plan. On August 7, the company announced a 54 trillion won ($38 billion) expansion of its chipmaking facilities in South Korea, a direct response to what it described as “the continuously growing demand for memory in the AI era.”

The centerpiece of the domestic push is a new DRAM fabrication plant, dubbed Yongin Y2, which will be the second of four fabs planned at the Yongin semiconductor cluster. Construction is slated to begin in July 2027, with the first cleanroom targeted for completion in June 2029. The plant will produce high-bandwidth memory (HBM) and other next-generation DRAM chips. Separately, the Cheongju M17 NAND fabrication plant will break ground in February 2027, with its first cleanroom expected by the end of 2028. The investment period for both projects extends through April 2031.

ProjectLocationProduct FocusGroundbreakingFirst Cleanroom TargetYongin Y2Yongin, South KoreaHBM and next-gen DRAMJuly 2027June 2029Cheongju M17Cheongju, South KoreaNAND flashFebruary 2027End of 2028

Note: Investment period for both projects runs through April 2031. Total planned expenditure is 54 trillion won ($38 billion).

SK Hynix has emerged as a linchpin of the artificial intelligence infrastructure boom. Its HBM chips, which stack DRAM layers to deliver blazing-fast data transfer speeds, are essential components in Nvidia’s graphics processing units that power AI data centers. The company has said its production capacity is sold out through 2027, and it is increasingly locking in long-term supply agreements with major customers.

Despite the strong demand backdrop, investor sentiment around AI-exposed stocks has oscillated between exuberance and skepticism. SK Hynix shares closed down 4.9% in Seoul trading on August 7, though they trimmed losses to 2.1% in after-hours trading on the Nextrade platform. The broader Kospi index has been buffeted by shifting expectations about the durability of AI spending.

In a separate regulatory filing on the same day, SK Hynix sought to address shareholder concerns by signaling an update on its capital return policy. “The company is actively reviewing additional shareholder return initiatives as part of its ongoing commitment to enhancing shareholder value,” it said in a statement. The company expects to provide details on the plan during the third quarter.

SK Hynix’s potential Chongqing transaction would mark a notable strategic shift for a company that established its first major overseas wafer plant in Wuxi more than two decades ago. Along with domestic rival Samsung Electronics Co. (005930), SK Hynix has made a large commitment to expanding Korea’s semiconductor manufacturing base. South Korea’s industry ministry announced a broad plan at the end of June that aims to double the nation’s memory production capacity within five years and secure world-class manufacturing capabilities.

The Chongqing review is at a very early stage. The people familiar with the matter cautioned that the company may ultimately decide against any transaction. SK Hynix has not publicly commented on the deliberations.