Apple is in talks to buy chips from two Chinese memory semiconductor companies on a US Defense Department blacklist, Bloomberg reported Monday.
According to the report, several sources told Bloomberg that Apple is seeking to buy memory components from Changxin Memory Technologies (CXMT) and Yangtze Memory Technologies (YMTC) for use in devices sold within China. However, the sources added that the negotiations are still ongoing and have not yet been finalized.
If Apple buys chips from CXMT and YMTC, its number of memory suppliers would grow from three to five. Apple currently relies on Samsung Electronics, SK hynix, and Micron. Bloomberg reported that Apple Chief Executive Officer Tim Cook had earlier directly asked Trump administration officials, including US Treasury Secretary Scott Bessent, to ease the potential political fallout should the deal go through.
CXMT and YMTC are on the "1260H list," which the US Defense Department uses to designate companies supporting the Chinese People's Liberation Army. However, Bloomberg explained that Apple does not need official US government approval to buy chips from the two companies. Still, there is a risk of fierce backlash from security hawks in the US amid heightened US-China tensions in the advanced technology sector. Some Trump administration officials have already expressed opposition internally.
The backdrop to Apple's sensitive move is an unprecedented memory supply crunch triggered by the AI boom. Major memory makers have reduced supply for mobile and PC products as demand surged for server memory such as DRAM and NAND flash used in building AI data centers. Last month, Apple raised prices across all its products, including Mac, iPad, home devices, and Vision Pro, precisely because memory prices soared.
Significant political barriers remain before negotiations with the Chinese companies can be concluded. House Foreign Affairs Committee Chairman Rep. Brian Mast strongly objected, saying, "CXMT and YMTC are Chinese military companies that support the Chinese Communist Party's military modernization and pursuit of AI dominance." He added, "If this deal goes through, it would undermine the president's agenda to secure supply chains and win the AI arms race." In particular, YMTC is also on a separate blacklist (the list of companies subject to export restrictions) issued by the US Commerce Department in 2022, meaning transactions with US suppliers require separate export licenses. Apple also had a precedent in 2022 when it attempted to procure some memory from YMTC but was thwarted for the same reason.
