Apple Scraps Plans To Buy iPhone Memory From China-Based YMTC Due To Export Controls

Apple is putting a plan to use memory chips from China’s Yangtze Memory Technologies Co. on hold thanks to new regulations out of the White House, according to a report this weekend from Reuters. 

The technology giant will shelve plants to use the company as a results of Washington’s “tighter export controls against Chinese technology companies”, the report said.

The company had planned to use Yangtze Memory Technologies Co.’s NAND flash memory chips in iPhones as early as this year. The memory company, however is a Chinese state-run corporation. 

It has been called “China’s hope for breaking into the NAND flash memory arena” by Nikkei. 

Apple was considering buying up to 40% of the chips that it needed for all iPhones from the company when the U.S. added the company – along with dozens other China-based corporations – to a list that U.S. officials have been “unable to inspect”, the report says.

Nikkei also reported over the weekend that the chips were “at least” 20% cheaper than those of rivals. “The products have been verified, but they did not go into the production lines when mass production of the new iPhone began,” one source told the news outlet.

“YMTC is government-subsidized so they can really outprice competitors,” another said. 

Brent Fredberg, director of investments at Brandes Investment Partners in San Diego commented: “Apple may continue wanting to use YMTC in the local market for China. But the way the regulations are set up currently, it’s very unlikely that YMTC will even be able to supply the kind of NAND chips in a couple of years that Apple would want.”

The Chinese memory company is also in the midst of being investigated by the U.S. Commerce Department, who is looking into whether or not the company violated export controls by selling to Huawei Technologies Co Ltd.

The Biden administration has put forth the new export controls on China to try and slow the company’s technological and military advancements, Reuters reminded. 

The ban has helped stoke tensions with China who, this week snubbed the Biden administration, “stonewalling” them on setting up plans for a meeting between Xi Jinping and President Biden that was originally scheduled for November.