US urges Apple not to use Chinese memory chips amid global shortage

The administration of US President Donald Trump does not want Apple to purchase memory chips from Chinese manufacturers, US Commerce Secretary Howard Lutnick said in an interview. 

However, Apple may still go ahead with such purchases, Caliber.Az reports, citing The Wall Street Journal (WSJ).

Surging demand for memory chips from data center operators has triggered a global shortage and sent prices sharply higher for the remaining supplies. Apple and other manufacturers have been forced to significantly raise the prices of finished products, while Apple has also turned to Chinese suppliers in an effort to mitigate the impact of the shortage.

“The Trump administration is not in favor of that,” Lutnick said in an interview following a visit to an Apple manufacturing facility in Houston. There should be “other solutions to the memory issue, but it’s not great American companies using Chinese memory,” he said, adding that he had conveyed this position to Apple’s management.

According to people familiar with the matter, iPhone maker Apple is testing memory chips from Chinese companies CXMT and YMTC, suggesting that the company could use them in devices intended for the Chinese market. HP and Acer have already begun installing CXMT memory in computers sold outside the United States. US regulations require American companies to obtain a license to transfer information about CXMT and YMTC products.

However, such a requirement applies only if Chinese manufacturers produce chips specifically to Apple’s specifications. Negotiating prices and purchasing finished products can be done without government approval.

Apple Chief Operating Officer Sabih Khan declined to confirm in an interview that the company is testing Chinese memory chips. He said, however, that given the scale of the shortage, Apple has to consider “all options,” including working with existing suppliers to increase production for the US market. The company can modify individual iPhone components, but there is little flexibility when it comes to memory, meaning the use of Chinese components cannot be ruled out.

Some tension is emerging between the Trump administration and Apple, although both sides have sought to publicly emphasize their unity. As the largest US manufacturer of consumer devices, Apple could play a major role in bringing production back to the United States. The company has already taken initial steps in that direction in an effort to secure lower tariffs imposed by the Trump administration.

However, significantly more investment is still being directed toward overseas supply chains. US-based Micron has urged the White House not to allow Apple to use Chinese chips, arguing that this would harm domestic production and undermine Trump’s plans to bring manufacturing back to the United States. Micron has major investment plans in the US, giving it leverage in negotiations with the administration.

The memory chip shortage has affected not only Apple but also companies across a wide range of industries, from medical equipment manufacturers to automakers. However, the crisis cannot be resolved through political will alone, as building the necessary production capacity will take at least a year.

Most of Apple’s supply chains remain concentrated in Asia, and the company is working with contract manufacturers to build new iPhone assembly plants in India. Apple has pledged to spend several tens of billions of dollars on iPhone chip production in the United States and on a new Mac mini assembly line in Texas. The company is also seeking to help chip manufacturers rebuild their supply chains.

By Jeyhun Aghazada