Apple wants to buy memory chips from Chinese companies that the U.S. government has blacklisted. At the same time, Apple's CEO Tim Cook has appealed to Trump administration officials to allow the deals.
The two Chinese firms, Yangtze Memory Technologies (YMTC) and ChangXin Memory Technologies (CXMT), have been on the Pentagon's 1260H list - YMTC since January 2024 and CXMT since 2025. YMTC was also placed on a separate U.S. Commerce Department blacklist in 2022. Even though Apple does not require official US permission to purchase chips from CXMT or YMTC, the firm could face severe criticism from security-focused politicians in the capital.
A global artificial intelligence boom has created huge demand for high-end memory chips used in data centers. Memory manufacturers like Samsung, SK Hynix, and Micron have shifted their production lines to serve that market. That has left consumer electronics makers scrambling for chips.
Apple's current memory suppliers - Samsung, SK Hynix, and Micron - have found it difficult to meet the rising demand. The shortage has pushed prices up sharply. An Apple spokesperson said the company has "never seen a component price increase this much, this quickly."
Apple increased prices across its Mac, iPad, home device, and Vision Pro lines last week, aiming to counter rising costs from the memory chip deficit. On the same day, Microsoft Corp. raised the cost of its Xbox consoles for the third time in more than twelve months, primarily due to the memory chip shortage.
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Chip makers are pouring massive amounts of money into new factories. Samsung and SK Hynix jointly committed over $880 billion to construct two fabrication facilities each, aiming for swift capacity growth, while Micron has detailed its intentions to invest billions in expanding US-based manufacturing.
Apple is now in talks with YMTC and CXMT. If Apple can secure deals with both companies, it would have five memory suppliers in total. That would help it reduce the impact of the global shortage. But the deals are not final yet.
Apple may limit use of the Chinese-made chips to devices sold only in China. That could reduce political backlash from U.S. officials.
Tim Cook personally contacted Treasury Secretary Scott Bessent about the matter. Apple is making a lobbying push to get the deals approved. But certain officials in the Trump administration have voiced opposition to permitting Apple the flexibility to include these two Chinese companies in its supply chain.
The Trump administration may object to Apple's plan. Adding Chinese suppliers that are already on a national security blacklist could create friction. Meanwhile, the three big memory makers - Samsung, SK Hynix, and Micron - are expanding their own production to meet demand.
For now, Apple is left negotiating with suppliers that the Pentagon says are a threat.
Being placed on the Pentagon's 1260H list does not automatically prohibit U.S. companies from doing business with them, but it subjects Apple to intense scrutiny from lawmakers who view such partnerships as a national security risk. YMTC, already restricted by the Commerce Department's entity list, has been a contentious supplier for Apple in the past; earlier reports indicated Apple considered YMTC for iPhone storage before U.S. sanctions derailed those plans. Now, with the memory crunch worsening, Apple appears willing to revisit those ties despite ongoing political tensions.
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