Apple is in active negotiations to purchase memory chips from ChangXin Memory Technologies Inc. (CXMT) and Yangtze Memory Technologies Co. (YMTC), two Chinese memory makers on the Pentagon’s ban list, according to Bloomberg. Both firms are identified as entities with alleged ties to the People’s Liberation Army that the US government considers a national security threat. Apple contacted the Commerce Department and has since expanded its lobbying efforts to secure clearance for using chips from these firms in devices sold in China.
CEO Tim Cook signaled the company’s intentions in a recent Wall Street Journal interview, describing the memory shortage as unlike anything he had experienced in over 40 years and comparing it to a hundred-year flood. When asked whether trade restrictions on Chinese suppliers should be loosened, Cook said: “I think everything needs to be on the table. I think we should look at all supply.”
Apple raised prices on Macs, iPads, Apple TV, HomePod, HomePod mini, and Vision Pro, with increases ranging from $30 for the HomePod mini to as much as $1,300 for the Mac Studio. RAM and NAND storage chip prices surged due to massive demand from companies building out AI data centers; SK Hynix and Micron have increasingly redirected production capacity toward high-bandwidth memory (HBM) chips used in AI accelerators, creating severe supply constraints for the consumer electronics market. Apple has not yet raised iPhone prices, though new models arriving in September are expected to cost more than current offerings.
Apple’s lobbying effort faces steep political headwinds. The Pentagon placed both CXMT and YMTC on its blacklist because of their alleged connections to the Chinese military, making approval uncertain. The company sought identical permission from the Biden administration in 2022 to use chips from Chinese suppliers exclusively for iPhones sold in China, and that request was rejected. Using chips from blacklisted firms could also trigger restrictions on federal employees’ use of iPhones, further complicating any approval. Earlier this year, Apple accepted a 100 percent price markup from Samsung for memory chips rather than pursue alternatives, a decision that reflects the company’s constraints when its primary suppliers hold pricing power.
