Trump administration urges Apple to stay away from Chinese memory chips

U.S. Commerce Secretary Howard Lutnick has urged Apple not to turn to Chinese memory-chip suppliers as the company explores ways to ease an ongoing global shortage of memory components, The Wall Street Journal reported.

Over the past several months, Apple has been seeking approval from the Trump administration to purchase memory chips from two Chinese companies, CXMT and YMTC. The proposal has faced bipartisan opposition in Washington.

YMTC is listed on the U.S. Commerce Department’s Entity List, while the Pentagon has designated both YMTC and CXMT as Chinese military companies because of their alleged ties to China’s military.

The issue goes beyond the competitive disadvantage that U.S. companies could face when competing with Chinese rivals benefiting from state subsidies. Apple also typically requires customised components for its devices.

Apple Chief Operating Officer Sabih Khan, however, told The Wall Street Journal that although the company customises many components used in the iPhone, “there isn’t a lot of customisation” when it comes to memory. That could allow Apple to use off-the-shelf Chinese memory chips instead.

If Apple were to require customised memory chips, however, the company would likely have to share product information with CXMT or YMTC. Such information is currently subject to U.S. export controls and would require a license from the Commerce Department.

Apple has made little secret of its efforts to broaden its memory supply options. CEO Tim Cook has argued that the United States should “look at all supply,” while reports have indicated that Apple has already been discussing the issue directly with the Trump administration. During the company’s most recent earnings call, Cook said Apple was “evaluating all options.”

Reports have also said that Apple was already testing memory chips from CXMT and exploring a potential agreement with YMTC. Those reports prompted a bipartisan group of U.S. senators to urge Apple to abandon any plans to source memory from the Chinese companies.

Lutnick has now weighed in, making clear that the Trump administration opposes Apple’s plans.

“The Trump administration is not in favour of that,” Lutnick said in an interview with The Wall Street Journal after touring an Apple manufacturing facility in Houston. There have to be “other solutions to the memory issue, but it’s not great American companies using Chinese memory.”

The Wall Street Journal also quoted Lutnick as saying that the Trump administration does not want Apple to buy memory chips from China, although Apple may proceed with such purchases anyway.

Lutnick made the comments one day after joining Cook at Apple’s new Advanced Manufacturing Centre in Houston, Texas, along with Senator Ted Cruz and other federal and local officials.

The new centre is part of Apple’s announced $600 billion investment in U.S. manufacturing. The investment is widely viewed as part of the company’s effort to maintain favourable relations with the Trump administration and secure advantageous agreements in return.

By Tamilla Hasanova