Apple tests memory chips from China’s CXMT to ease AI-driven supply crunch - WSJ

Apple is exploring the possibility of incorporating memory chips made by China’s CXMT into its products to help alleviate a global shortage caused by the ongoing AI boom, according to the Wall Street Journal. The tech giant has engaged in preliminary discussions with the Chinese firm regarding the potential of becoming a supplier for devices sold in the Chinese market. However, Apple must seek White House approval before proceeding with any deal involving CXMT.

The move by Apple comes as the company raises prices on its products worldwide, attributing the increased costs to the surge in memory-chip expenses driven by heavy demand from AI companies. Securing a supply line from a Chinese manufacturer like CXMT could provide Apple with additional leverage to counteract these cost pressures.

Federal regulations prohibit U.S. companies from sharing technology with CXMT, including technical discussions essential for producing the specialized chips Apple relies on. This restriction effectively dismisses the idea of custom orders from CXMT. However, Apple can still purchase off-the-shelf components from CXMT and negotiate pricing, according to the WSJ report.

Some U.S. policymakers express concerns that orders from major American companies could grant CXMT access to U.S. expertise and capital, potentially benefiting China’s military and weakening Micron Technology. The Pentagon has placed CXMT on a list of companies with alleged ties to China’s military.

Despite these concerns, CXMT has reached its production capacity for this year, leaving limited room for new international customers. HP and Acer have already secured limited volumes from CXMT and are working towards securing larger supplies for the following year. CXMT chips are priced at or above comparable products from other manufacturers such as Micron, SK Hynix, and Samsung Electronics, primarily due to tight supply and higher production costs compared to their foreign counterparts.

The surging memory prices have already started to impact the shipments of PCs and smartphones. CXMT has emerged as the world’s fastest-growing supplier of DRAM (Dynamic Random Access Memory), the most common type of memory chip, with revenue in the second quarter more than eight times higher than the previous year, fueled by strong demand, expanding capacity, and price increases.