America’s ban on Chinese companies seems to be hurting some of its biggest companies as well. With memory chips shortage at all-time high and prices sky rocketing, Apple reportedly wants White House to allow it to work with a ‘banned’ Chinese company. According to a report in Financial Times, Apple is lobbying the Trump administration for clearance to buy memory chips from ChangXin Memory Technologies (CXMT), a Chinese company that the Pentagon has put on a blacklist because of alleged connections to the People’s Liberation Army. ChangXin Memory Technologies is China’s top memory chip maker and securing the company as a memory supplier would help improve a situation in which the iPhone maker is being squeezed by its own suppliers.The lobbying from Apple underscores the bind facing major American technology companies as soaring memory chip costs collide with Washington’s national security restrictions on Chinese chipmakers. The iPhone maker has lobbied the White House for approval aimed at easing financial pressure on the company from rising memory chip prices, says the newspaper report, citing unnamed sources. Apple is said to have approached the Commerce Department more than a month ago and also engaged other administration officials and allies in Washington, says the report.
When Apple was warned ‘not to play with fire’ on China
The Chinese chip companies ChangXin Memory Technologies (CXMT) and Yangtze Memory Technologies Co Ltd (YMTC) were designated as Chinese military companies under the Biden administration. Incidentally, Apple is per se not barred from buying chips from CXMT, or YMTC. However, with the Pentagon putting both companies on its Chinese Military Company blacklist, known as Pentagon’s 1260H list, it creates reputational risk for companies that use their products, but there are no legal ramifications.In fact, in February this year, the Pentagon updated its 1260H list before withdrawing it within an hour. And according to sources Pentagon had to withdraw the changes within hours as several people in the White House were not happy that Pentagon had taken CXMT and YMTC off the ‘ban list’. When the Pentagon re-released the list this month, both of these Chinese memory chip manufacturers had been reinstated. The report says that Congress would probably object strongly if the administration blessed Apple purchases from CXMT, which is regarded as a Chinese national champion.“Apple choosing to partner with a Chinese military company would be a grave mistake,” John Moolenaar, the Republican chair of the House China committee, told the FT. “Helping the [Chinese Communist Party] succeed in its plans to dominate critical supply chains will make our country’s tech industry and economy more dependent on China at a time when we must build secure tech supply chains with our allies,” Moolenaar said.Apple reportedly faced a backlash in 2022 when it considered buying memory chips from YMTC for iPhones to be sold in China. Marco Rubio, who was then the top Republican on the Senate intelligence committee, told the FT that “Apple was playing with fire”.Rubio added that Apple would be “subject to scrutiny like it has never seen from the federal government” if it proceeded to procure YMTC chips.Outside China, the memory chip industry is heavily consolidated into three companies — Micron, SK Hynix and Samsung. Apple relies on US chipmaker Micron in addition to South Korea’s Samsung and SK Hynix for the DRam memory used in its devices.
Apple on increase in prices of MacBook and iPads
Earlier this week, Apple increased the prices of iPads and MacBooks saying that it could no longer shield customers from soaring memory and storage chip costs. The company blamed “unsustainable” memory prices for its decision to pass on the costs to consumers. Apple’s rare move to raise prices for MacBooks and iPads wiped $263 billion from its market capitalisation, its second-biggest single-day drop.
