US opposes Apple using Chinese memory chips
What's the story
US Commerce Secretary Howard Lutnick has advised Apple against sourcing memory chips from China. The recommendation comes as part of the company's efforts to find alternative suppliers amid a global chip shortage. Over the past few months, Apple has been seeking approval from the Trump administration for such purchases from two Chinese firms, CXMT and YMTC.
Security worries
Concerns over national security and competitive disadvantage
The push for Chinese memory chips has been met with bipartisan resistance.
The US Commerce Department has placed YMTC on its Entity List, while the Pentagon has classified both companies as Chinese military enterprises due to their alleged connections with China's armed forces.
Beyond the potential competitive disadvantage posed by state-subsidized Chinese rivals, there's also the issue of Apple's need for customized components in its devices.
Customization concerns
The customization conundrum
Apple's COO Sabih Khan clarified that while the company customizes many iPhone components, "there isn't a lot of customization" when it comes to memory.
This raises the possibility that Apple could use off-the-shelf Chinese memory chips.
However, if customized chips are needed, it would likely have to share product information with CXMT or YMTC, something currently prohibited under US export-control rules without a license from the Commerce Department.
Supply diversification
Apple's push for memory supply diversification
Apple has been vocal about its plans to diversify its memory supply chain.
This includes Tim Cook's call for the US to "look at all supply," and reports of direct discussions with the Trump administration on this matter.
Despite bipartisan resistance, Apple was reportedly testing memory chips from CXMT and considering a deal with YMTC.
Official opposition
Lutnick's stance on the matter
Lutnick has publicly opposed Apple's plans, saying, "The Trump administration doesn't want Apple to buy memory chips from China."
He added, "There have to be other solutions to the memory issue, but it's not great American companies using Chinese memory."
His comments came after a visit to an Apple manufacturing facility in Houston with Cook and other officials.