Apple’s reliance on China put to test as political pressure freezes new chips plan

Apple has been trying to rely less on China due to US government pressure. While BGR has been reporting that the Cupertino company is trying to diversify its supply chain from China to India, Taiwan, and other Asian countries, it seems Apple has another reason to keep doing that. A report indicates that the company’s plans to use China’s YMTC chips have been put on hold due to US political pressure.

According to Nikkei Asia, Apple will no longer use memory chips from China’s Yangtze Memory Technologies Co (YMTC) in its products.

The publication explains that “the move comes amid the latest round of US export controls imposed against the Chinese tech sector and is a sign that Washington’s crackdown is creating a chilling effect down the supply chain.”

In March, it was reported by Bloomberg that Apple was considering for the first time adding a Chinese flash storage maker to its supplier roster:

The iPhone maker is now testing sample NAND flash memory chips made by Hubei-based Yangtze Memory Technologies Co., [sources] said, asking not to be identified discussing private deliberations. Apple’s been discussing the tie-up with Yangtze, owned by Beijing-backed chipmaking champion Tsinghua Unigroup Co., for months though no final decisions have been made.

At that time, the publication already brought up a few reasons why this could be an issue for Apple in the long term:

Tying up with Yangtze could open Apple to criticism back home given ties between Washington and Beijing are fraying over China’s ambiguous stance on the Ukraine war as well as American efforts to contain its technological ascent. U.S. lawmakers have long railed against the way Beijing champions and subsidizes local industry.

Apple wanted to use YMTC chips because they are at least 20% cheaper than those of its leading rivals, according to supply chain executives. While the Cupertino company thought about using these chips for the Chinese market, one source told Nikkei Asia that Apple was considering “eventually purchasing up to 40% of the NAND flash memory needed for all iPhones” as YMTC is government-subsidized.

The publication says that geopolitical pressure and criticism from US policymakers led Apple to change course as Washington put YMTC on the “Unverified List,” meaning the company will likely not be able to use these chips outside the Chinese market.

More Apple coverage: Here are the latest Apple plans to shift iPhone and Mac productions outside China