Plans by Apple to purchase up to 40% of iPhone flash memory chips from a Chinese business have been canceled after the US government placed export restrictions on the chip maker.
The Cupertino company had a two-step process for purchasing memory chips from Yangtze Memory Technologies Co.
iPhone flash memory plans
Apple achieves its enviable margins by using iPhone flash storage chips, which are typically charging $100 for each step up in capacity.
Apple currently buys a large portion of these chips from two Japanese companies, Western Digital and Kioxia, as well as additional supply from Samsung and SK Hynix. It was reported back in March that Apple planned to add a Chinese supplier to the list for the first time ever.
According to sources, the iPhone maker is currently testing samples of Yangtze Memory Technologies Co.''s NAND flash memory chips, which was built by Hubei, and therefore refused to be identified in any discussion. Apples have been discussing the relationship with Yangtze, owned by Tsinghua Unigroup Co., for months, although no final decisions have been made.
At the time, some considered this approach a controversial plan, not only increasing rather than decreasing Apple''s dependence on China, but coming at a time when the US administration was wary of China''s harsh offensive against the Russian invasion of Ukraine. China had not condemned the invasion and occupation, and the country did not freeze assets or imposed sanctions prohibiting the import of Russian goods.
Chinese purchase plans on hold
Nikkei has a bit more detail on Apples plans, which it claims have been put on hold.
According to it, the first step would have been to use YMTC flash storage chips for all iPhones destined for the Chinese market, while a longer-term plan would have seen Apple buy enough of the chips for 40% of worldwide iPhone production. These plans have been temporarily delaying.
According to many sources, Apple has put on hold plans to utilize Yangtze Memory Technologies Co. (YMTC) in its products.
The move comes amid the latest round of US export restrictions imposed on the Chinese tech industry and indicates that Washingtons crackdown is causing a chilling effect down the supply chain.
YMTC was added to a list of Chinese companies that were unnamed earlier this month, implying that US officials have been unable to perform checks to ensure that the chipmaker is not supplying Huawei. The Chinese telecoms companies have been banned from using spy-chip allegations.
Due to US restrictions, companies can''t sell any equipment to YMTC.