The manual states which modifications can be done on an IDENTITY column:
Modifying the generated or identity property of a column
If you try an "ALTER TABLE ... ALTER COLUMN ... SET GENERATED BY DEFAULT AS IDENTITY ( MAXVALUE 65536 )", you get an error SQL0190. The explanation for that error states:
Quote:
* If SET GENERATED ALWAYS AS IDENTITY or SET GENERATED BY DEFAULT AS
IDENTITY is specified, the column is already defined with a form of
generation (default, identity, or expression) and there is no
corresponding DROP in the same statement.
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Combining this with the above, you have to drop the identity property from the column and re-add.