Apple Decides Using Cheap Chinese Memory Chips in iPhones Is Too Risky

The export controls imposed by the US government made Apple think twice about sourcing the flash memory used in iPhones from China.

As Nikkei reports(Opens in a new window), multiple sources have confirmed Apple has “put on hold” its plan to start sourcing 128-layer 3D NAND flash memory from Chinese company Yangtze Memory Technologies Co. (YMTC). The memory chips manufactured by YMTC had already completed months of verification and certification, and were set to be used in iPhones for the Chinese market initially.

Apple’s decision to source memory chips from YMTC was a simple case of economics. The company is backed by the Chinese state, and according to supply chain executives, could price its chips at least 20% lower than the competition. On the scale Apple operates, that’s a cost saving the company couldn’t ignore.

YMTC is currently on the US government’s Unverified List, which isn’t punitive. The list exists for persons, entities, or governments who can’t be properly checked due to reasons outside of the government’s control. However, being on the list means no design, technologies, specs, or documents can be shared with YMTC, and there’s also a chance YMTC could end being placed on the Entity List (export block list) in the future. In other words, relying on the company for millions of memory chips would be a huge risk for Apple to take right now.

Apple sources its flash memory from a range of manufacturers including Kioxia, Western Digital, Micron, and Samsung, but it looked to diversify the supply further after a supply disruption at Kioxia(Opens in a new window) back in February due to raw material contamination. However, it seems as though Apple will just need to ensure it can better cope if another disruption occurs at one of its existing suppliers.

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