Apple asks U.S. for assurances on Chinese memory chip supplier
Apple is seeking U.S. approval tied to purchases from CXMT as memory-chip shortages push up costs across its product lineup.
By Hana Yoshida · Markets Reporter
3 min read
Apple is asking U.S. officials for clearance tied to buying memory chips from ChangXin Memory Technologies, the Chinese chipmaker known as CXMT, the Financial Times reported. The request matters because Apple is trying to contain rising component costs during a memory shortage that has already pushed it to raise prices on several products, according to Bloomberg.
The Financial Times reported that Apple has been lobbying the Commerce Department and other parts of the Trump administration for permission or assurances related to purchases from CXMT, citing six people familiar with the matter. CXMT is on the Pentagon’s 1260H list, which identifies companies the U.S. government alleges have links to China’s military, according to the newspaper.
Apple is not currently prohibited from using CXMT as a supplier, the Financial Times reported. The company is seeking guarantees that CXMT will not be placed on the U.S. Entity List, a designation that would bring tougher licensing requirements, the newspaper said.
The Financial Times said Apple’s push comes as Washington and Beijing remain locked in trade tensions that include rare earths. Apple declined to comment to the Financial Times, while the White House did not respond to the newspaper’s request for comment, according to the report.
Memory shortage raises costs
Bloomberg reported that Apple raised prices this week across all Macs, iPads, home devices and the Vision Pro headset. The company took the step as it sought to offset higher costs linked to an unusual shortage of memory chips and storage, Bloomberg said.
Apple warned last month that memory shortages would get worse during the year, according to Bloomberg. The shortage has affected the broader technology industry, leading companies to lift prices and cut output, Bloomberg reported.
The pressure on Apple comes as demand for memory has become a central issue for companies building and selling technology tied to artificial intelligence. Bloomberg reported that the memory crunch has pushed up costs and fed concern that higher device prices could weaken consumer demand.
Bloomberg also reported that Apple’s price increases contributed to a selloff in global technology stocks this week. Investors have been weighing whether higher component costs could slow device sales and eventually cool the rally in memory-chip shares that has supported parts of the AI trade, according to Bloomberg.
Why CXMT’s status matters
The Pentagon had previously removed CXMT and Yangtze Memory Technologies Co. from the 1260H list, but returned both Chinese memory-chip makers to the newest version, Bloomberg reported. The list does not carry many immediate legal penalties, according to Bloomberg.
Even so, Bloomberg reported that investors often treat the Pentagon designation as a warning sign because it can come before stricter trade limits. Placement on the Entity List would be more consequential, because it would subject dealings with the named company to stiff U.S. licensing rules, according to the Financial Times.
For Apple, the request signals how the memory shortage is forcing difficult supplier decisions, according to the Financial Times and Bloomberg reports. The company is weighing cost pressures in its hardware business against the risk that a prospective supplier could face sharper U.S. restrictions.
This story draws on original reporting from Fortune.