Apple has a memory problem. With the global chip shortage squeezing supply and pushing prices higher, the company has been looking for more places to source the memory in its devices. Two potential suppliers are in China, but the U.S. government isn’t particularly happy about that idea. According to The Wall Street Journal, U.S. Commerce Secretary Howard Lutnick has told Apple that the Trump administration does not want the company buying memory chips from Chinese manufacturers.
Apple has reportedly been considering chips from CXMT and YMTC as it tries to expand its supplier options. The move, however, has already attracted opposition from lawmakers on both sides of the aisle, and Lutnick’s latest comments make the administration’s position even clearer.
Why Apple is looking to China in the first place
Apple has spent months exploring ways to deal with tighter memory supplies. CEO Tim Cook has previously said the company is evaluating its options, and reports suggest Apple has tested DRAM from CXMT while also considering YMTC as another potential supplier. Memory could also be relatively easy for Apple to source from elsewhere compared with some of the highly customized components inside an iPhone. Apple COO Sabih Khan told the WSJ that memory doesn’t require the same degree of customization as many other parts, potentially allowing Apple to use more readily available chips.
The problem isn’t simply where those chips are manufactured. YMTC is already on the US Commerce Department’s Entity List, while the Pentagon has designated both YMTC and CXMT as Chinese military companies over alleged links to China’s military. If Apple needed the companies to customize chips, sharing certain technical information with them could also run into US export restrictions and require government approval. That has turned what might normally be a supply-chain decision into a much bigger political issue.
The Trump administration wants another solution
Lutnick isn’t leaving much room for interpretation. Speaking to the WSJ after visiting an Apple manufacturing facility in Houston, he said the administration is not in favor of Apple sourcing memory from China. He argued that there should be other ways to address the shortage. The pushback arrives at an interesting time for Apple’s relationship with Washington. Lutnick recently joined Cook at the opening of Apple’s Advanced Manufacturing Center in Houston, part of the company’s broader $600 billion U.S. investment commitment.
That domestic expansion shows Apple is putting serious money behind manufacturing in the US, but it doesn’t solve every part of its enormous global supply chain overnight. Memory is becoming one of those sticking points. Apple may still want more suppliers as it deals with constrained availability and rising costs, but getting Chinese manufacturers into that mix is looking increasingly complicated. For now, Apple needs more memory chips, and Washington would very much prefer that it finds them somewhere else.