US presses Apple to avoid Chinese memory chips amid shortage - WSJ reports

The U.S. government has urged Apple to refrain from sourcing memory chips from Chinese manufacturers as the tech giant seeks alternatives amidst an AI-driven shortage, according to a report by the Wall Street Journal. Commerce Secretary Howard Lutnick revealed that he had directly communicated this stance to Apple, emphasizing the administration's opposition to major US companies procuring memory from China.

Apple has been evaluating chips from ChangXin Memory Technologies and Yangtze Memory Technologies for potential use in devices sold in China, sources familiar with the situation disclosed. The demand from AI data center manufacturers has resulted in memory chip shortages and price increases, prompting Apple and other consumer-electronics manufacturers to contemplate price hikes.

Apple's Chief Operating Officer, Sabih Khan, did not confirm Apple's testing of Chinese chips but acknowledged that the scarcity necessitated the exploration of all viable options, including aiding local suppliers in expanding US production capacity. U.S. regulations necessitate American companies obtaining licenses before sharing product details with Chinese chipmakers ChangXin Memory Technologies (CXMT) or Yangtze Memory Technologies (YMTC) to manufacture customized chips for Apple.

Apple can still acquire standard components from these Chinese manufacturers and negotiate prices directly. Meanwhile, Micron Technology has petitioned the administration to prevent Apple from utilizing Chinese memory, contending that such purchases would impede domestic manufacturing and clash with Washington's semiconductor reshoring objectives.

Furthermore, senators representing states where memory-chip producers are set to expand have written to Apple CEO Tim Cook in July, urging the company to avoid collaboration with Chinese suppliers. This situation adds a fresh layer of discord between Apple and the administration, which has been advocating for a greater shift of its supply chain to the U.S. Washington has successfully secured Intel's agreement to manufacture certain Apple chips and a pledge for iPhone and Apple Watch cover glass production to occur domestically.

Apple has also broadened Mac Mini assembly in Texas, yet the majority of its supply chain persists in Asia, with the company augmenting iPhone production capacity in India.