The administration of U.S. President Donald Trump is pressing Apple hard over the company’s consideration of using Chinese-made memory chips. Apple is weighing the move to ease the cost burden on its smartphones as an AI-driven surge in memory chip prices pushes up components costs.
Some analysts read Apple’s talk of Chinese chips as a form of leverage to pressure other memory chipmakers into cutting prices. Still, if the memory supply crunch persists, the possibility of iPhones or iPads carrying Chinese DRAM or NAND flash chips cannot be ruled out.
U.S. Commerce Secretary Howard Lutnick told Apple that using Chinese memory is not advisable, The Wall Street Journal reported on the 13th local time. “It is not a good idea for great American companies to use Chinese memory,” Lutnick said in an interview.
Apple is considering using memory produced by China’s DRAM maker ChangXin Memory Technologies (CXMT) and NAND flash maker Yangtze Memory Technologies (YMTC), citing the price surge in a memory chip market dominated by Samsung Electronics (005930.KS), SK hynix (000660.KS) and Micron.
With quality concerns over Chinese memory chips persisting worldwide, Apple is expected to use these parts first in products sold in China if it adopts them. Apple Chief Operating Officer Sabih Khan did not confirm whether the company is reviewing Chinese memory, but said the company must consider every option given the scale of the shortage.
Not only the U.S. government but also both Republicans and Democrats are wary of China’s push to build up its chip industry. China is nurturing its domestic firms with astronomical subsidies to achieve self-sufficiency in memory chips.
Above all, CXMT is on the U.S. Defense Department’s “1260H list” of companies it classifies as supporting China’s People’s Liberation Army. U.S. firms need government approval to provide product information to CXMT and YMTC, but buying commodity memory such as the DRAM or NAND flash they produce is not subject to regulation. Micron, the world’s third-largest memory chipmaker, has also pushed back strongly against the possibility of Apple using Chinese memory. The company reportedly told the White House that Apple’s use of Chinese memory runs counter to the Trump administration’s policy of bringing manufacturing back to the United States. Senators representing New York, Indiana and Idaho — where Micron’s production facilities will be built — also met Apple Chief Executive Officer Tim Cook last month and urged the company not to cooperate with Chinese firms. Lutnick also called on Apple to reshore its operations, saying the company had built a stable supply chain based on low-wage labor but must now build one based on advanced manufacturing.