Trump administration pressures Apple: Do not buy memory chips from China
The US administration is pressuring Apple to avoid purchasing memory chips from Chinese manufacturers amid a global shortage of essential components.
The Trump administration is pressuring Apple not to purchase memory chips from Chinese manufacturers, precisely at a time when the global shortage of this essential component is pushing the iPhone maker to explore new suppliers. This was reported by The Wall Street Journal.
US Secretary of Commerce Howard Lutnick stated that the administration does not want large American companies to use Chinese-made memory chips. According to him, there are other solutions to the shortage, and he made it clear that this message was conveyed to Apple directly.
The confrontation arose against the backdrop of huge demand for memory chips from companies building and expanding data centers for artificial intelligence (AI). The demand has created a significant shortage and a spike in prices, which is weighing on Apple and other electronics manufacturers, even pushing them to raise product prices.
To cope with the shortage, Apple is evaluating memory chips from two Chinese manufacturers—CXMT and Yangtze Memory Technologies (YMTC)—ahead of the possibility of integrating them into devices to be sold in China. Computer manufacturers HP and Acer have also already begun using CXMT chips in products sold outside the US.
US regulation limits the ability of US companies to share with CXMT and YMTC the technological information required to adapt specialized chips. However, Apple can purchase off-the-shelf components from them and negotiate prices. Apple's Chief Operating Officer, Sabih Khan, did not confirm that the company is evaluating Chinese chips, but said that given the depth of the shortage, "we must explore all options." According to him, one of the options is to increase production in the US through existing suppliers. He added that unlike many other components in the iPhone, memory chips do not require significant adaptation, which may make it easier to switch suppliers.
This issue creates a new point of friction between Apple and the Trump administration, parallel to attempts by both sides to present cooperation in expanding production in the US. Apple has already committed to investing tens of billions of dollars in local chip production and has reached agreements under which Intel will produce some of the components for it. It has also committed to manufacturing cover glasses for iPhones and Apple Watches in the US.
One company particularly opposed to the possibility of Apple turning to China is the American firm Micron. The company asked the administration to prevent such a move, arguing that it would harm local production and contradict the policy of returning the chip industry to the US. Senators from states where large investments in memory plants are expected, including New York, Indiana, and Idaho, also reached out to Apple CEO Tim Cook and called on him not to work with the Chinese manufacturers.
The problem from the administration's perspective is that the shortage is not limited to Apple. Companies in the automotive and medical device sectors have also turned to the White House for assistance, but increasing memory chip production capacity could take more than a year. Lutnick made it clear that the pressure on Apple to bring more production back to the US will continue. According to him, the company has spent years building supply chains based on cheap labor in Asia, and now it must transition to advanced manufacturing in the US. Most of Apple's supply chain is still in Asia, and the company is simultaneously continuing to expand iPhone production in India.
