Apple has recently put their plans to use memory chips from China's Yangtze Memory Technologies Co. (YMTC) on hold, as reported by Nikkei Asia. This comes amid the latest round of US export controls imposed against the Chinese tech sector.
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WUHAN, CHINA - SEPTEMBER 16: (CHINA OUT) Customers line up at an Apple Store to pickup their orders of the new iPhone 14 on September 16,2022 in Wuhan. Hubei, China.
This signals Washington's crackdown is impacting the supply chain. In fact, Apple had finished the months-long process to certify YMTC's 128-layer 3D NAND flash memory for iPhones when the US government released tighter export restrictions against China this month.
The NAND Flash Memory
The flash memory is an important component found in all electric devices. YMTC's 128-layer chips are the most advanced chips so far. Initially, Apple planned to use the chips early this year because they are a lot cheaper. However, with the geopolitical pressure and criticism from US policymakers led the tech giant to change its course.
Originally, YMTC chips were planned to be used for iPhones sold in the Chinese market. However, Apple started to consider buying up to 40 percent of the NAND flash memory for all iPhones from YMTC. To-date, the chips have not been used in Apple products.
YMTC was placed on the "Unverified List." This makes US companies prohibited from sharing any design, technologies, documents or specifications to companies on the list without a license. Additionally, companies added to the list are likely to be added to the Entity List if they can't provide necessary information in a specific period, which is usually 60 days.
Apple started to engage with YMTC in 2018 with the aim to find more cost-effective memory solutions. On the other hand, YMTC is China's way to break into the NAND flash memory area that has long been dominated by many other companies, such as Samsung.
Also Read: Would Apple Expand Manufacturing Outside China? $8B Expected Loss Due to Lockdowns
Geopolitics in the US-China Trade War
The Apple/YMTC deal is a great example of the impact of America's policy on Chinese companies. Washington is taking a more cautious approach with the Chinese tech companies in the current climate. Although there are reasons to be cautious, it is difficult not to talk about the trade war between the US and China.
Even though the trade war has started to cool down in the past two months, Washington is still struggling to get the upper hand over China in terms of trade surplus. US Vice President Mike Pence said that Washington will continue to use the maximum leverage to change China's behavior.
In the past few decades, China has been on the road of industrialization. Chinese companies have been trying to catch up with US in terms of innovation and technologies.
China has a clear ambition to go global. They have the ambition to create a Chinese standard for 5G, which will create a closed ecosystem. This has led to the discussion of the possible trade war between the US and China in the next few months.
Related Article: Apple Shifts iPad Production to Vietnam, Leaving China Due to Supply Issues
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Written by April Fowell
