US Pressures Apple to Avoid Buying Chinese Memory Chips Amid Worsening Chip Shortage
Amid the AI-driven memory chip boom, supply remains tight and Apple is actively seeking additional sources. The US Commerce Secretary said he had directly told Apple that the government opposes major US companies purchasing memory chips from China.
According to people familiar with the matter, Apple is testing chips manufactured by ChangXin Memory Technologies (CXMT) and Yangtze Memory Technologies (YMTC), and is considering using them in devices sold in China. With strong demand from AI data center construction, memory chip supplies remain constrained, driving prices higher. Rising costs have prompted Apple and other consumer electronics manufacturers to raise product prices.
Apple’s Chief Operating Officer declined to confirm whether the company is testing Chinese-made chips. He said that given the unprecedented scale of the shortage, Apple must examine every viable option, including helping existing suppliers expand their production capacity in the US.
Under US regulations, American companies must obtain a license before sharing product information with CXMT or YMTC. Such information would be required to develop customized chips for Apple.
However, Apple can still purchase standard off-the-shelf components directly from the Chinese companies and negotiate prices with them. Micron Technology has asked the US government to block Apple from using Chinese memory chips, arguing that such purchases would undermine US domestic manufacturing and conflict with Washington’s goal of bringing semiconductor production back to the US.
Several senators representing states where memory chip manufacturers plan to expand production also wrote to Apple CEO Tim Cook in July, urging the company not to work with Chinese suppliers.
The dispute adds another point of friction between Apple and the Trump administration. The government has previously pressured Apple to move more parts of its supply chain back to the US. Washington has already helped facilitate Intel’s contract manufacturing of some chips for Apple, while Apple has committed to producing the cover glass for iPhones and Apple Watches domestically in the US.
Apple has also expanded Mac Mini assembly operations in Texas. However, the bulk of its supply chain remains concentrated in Asia, while the company continues to expand iPhone production capacity in India.
KeyBanc reiterated its Underweight rating on Apple, maintaining a price target of $250.00. The firm expects slowing user growth to eventually weigh on revenue growth in Apple’s services business. Compared with volume-driven growth, investors are generally less willing to assign higher valuation multiples to growth driven primarily by price increases.
Market Insight:
Apple has canceled plans to develop an all-glass iPhone model due to poor production yields. The model had originally been scheduled for release in 2027.
Meanwhile, driven by promotional campaigns, smartphone sales in China surged 62% year over year in June, helping Apple increase its market share in the Chinese market. However, overall smartphone shipments in China still declined 7% year over year in the first half of 2026.
