Apple, the world’s notoriously toughest buyer of components, has put Chinese-made memory chips to the test. Whatever the outcome, analysts say the move captures the dilemma of a big tech company confronting the U.S.-China semiconductor barrier.
The Wall Street Journal reported on the 9th (local time) that Apple is testing whether memory chips from ChangXin Memory Technologies (CXMT) can be used across several product lines, including the iPhone and MacBook. Apple has begun supply discussions with CXMT with the goal of using the parts in some products sold in China, and the talks are still said to be at an early stage.
◆ Apple turns to a Chinese chip
The DRAM under review is a short-term memory device that temporarily stores information while a device is working, and it is an essential component found in smartphones and laptops alike.
As global supply has tightened and prices have risen because AI data centers are absorbing huge amounts of memory, Apple has been raising product prices in various countries, citing higher memory costs.
CEO Tim Cook also said in an earnings call late last month that the company was facing severe supply constraints, directly pointing to shortages of advanced semiconductors and memory as a factor slowing growth.
With demand surging but parts still unavailable, Apple appears to be adding Chinese-made components to the list of options it had previously avoided. HP and Acer, laptop makers, are already using CXMT memory in devices sold outside the United States and are reportedly in talks to expand volumes next year.
The process now underway is a technical validation step. It is a certification stage used to verify a chip’s performance and stability before bringing a supplier into the production chain, and passing the test does not necessarily mean a purchase contract will follow. Neither Apple nor CXMT has commented.
Price negotiations have also reportedly not been smooth. Apple had previously approached CXMT as an additional supplier in an effort to secure lower prices, but did not get the outcome it wanted. With supply shortages, CXMT’s prices have climbed to the same level as global rivals, and some products are reportedly being traded at higher prices than those from Samsung Electronics, SK Hynix, or Micron. The talks are interpreted as being aimed less at securing a bargain than at securing volume.
◆ The White House, Congress, and Micron
For the deal to go through, Apple must first clear Washington’s gate. U.S. federal regulations prohibit American companies from discussing product specifications with CXMT or transferring technology to it.
What Apple is allowed to buy is limited to standardized, off-the-shelf products that do not require separate technical consultations, and the WSJ said these rules effectively block Apple from placing customized chip orders. The transaction itself would also require White House approval.
Political opposition is already being voiced openly. John Moolenaar, the Republican chair of the House Select Committee on China, and Representative Jake Whitesides, a Democrat, sent a letter last month to Commerce Secretary Howard Lutnick urging the administration to block Apple’s use of Chinese memory. Their concern was that Chinese companies could raise their capabilities by trading with Apple, and that those capabilities could in turn strengthen China’s military power.
Micron, the only major memory maker in the United States, has also moved to block the deal. Micron, which is building a new plant in New York State, has been voicing opposition to the government, arguing that companies supported by the Chinese government should not be allowed into the supply chains of U.S. big tech firms.
After it became known that CEO Tim Cook met with the commerce and treasury secretaries last month and asked to be allowed to use Chinese memory in products sold outside the United States, the confrontation between the two companies has become even more pronounced.
Apple’s attempt to source from China is not limited to DRAM. Combining outside reports, Apple is said to have also been negotiating with Yangtze Memory Technologies Co. (YMTC), China’s largest NAND flash maker, for storage chips. However, both CXMT, which is on the U.S. Defense Department’s list of companies linked to the Chinese military, and YMTC, which is on the Commerce Department’s export control list, face significant political headwinds.
◆ CXMT’s 7% share is challenging the Korean memory trio
CXMT’s rapid growth is another source of concern for the Korean industry. According to Counterpoint Research, CXMT’s global DRAM market share in the second quarter rose to 7% by revenue. The company’s stock surged 460% on its first day of trading on the Shanghai exchange last month, enough to make it the most valuable company by market capitalization on the Chinese mainland, reflecting the strong expectations of domestic capital.
With China’s push for semiconductor self-sufficiency and its huge domestic market behind it, many observers expect CXMT to continue flooding the standard DRAM market with low-priced volume. Neil Shah, an analyst at Counterpoint, said CXMT entering the top three is not a question of possibility but of timing.
Some analysts say the immediate impact may be limited. Even if Apple buys from CXMT, it would likely be restricted to using standard products in devices sold in China, and CXMT is reportedly running its facilities at nearly full capacity, leaving little spare volume for large overseas customers.
HP and Acer, which were early adopters of CXMT chips, have also only secured limited quantities.
There is still a wide technology gap in advanced products such as high-bandwidth memory (HBM), where Korean companies remain ahead.
For Korean chip makers, the main response strategy is seen as managing that gap. Since it is difficult to completely block China’s catch-up in commodity DRAM, analysts say the key is to widen the technology lead in higher-value products such as HBM and next-generation DRAM in order to protect profits. They also say it is necessary to defend market share among major customers such as Apple through quality and supply stability.
Some say the symbolism matters more than the volume. If CXMT passes Apple’s famously strict component validation process, it would amount to a seal of approval for CXMT’s technology and could lower the entry barrier for other finished-goods makers.
Whether this becomes a signal that China is pushing into the memory duopoly long shared by Samsung Electronics, SK Hynix, and Micron now depends on the White House’s decision and Apple’s final choice.