Apple Pushing to Buy Memory Chips From Blacklisted Chinese Supplier

Apple is lobbying the Trump administration for clearance to buy memory chips from a blacklisted Chinese company, according to six people familiar with the matter.

The iPhone maker has launched a campaign targeting officials across the administration and allies in Washington to secure a supply agreement with CXMT, according to the Financial Times.

Supply Chain Pressures

Apple is facing mounting financial strain after a recent decision to raise prices for MacBooks and iPads wiped $263bn from its market capitalization.

The company blamed "unsustainable" memory prices for passing the added costs onto consumers.

Securing CXMT as a memory supplier would help the tech giant remedy a situation in which it is being squeezed by its own suppliers.

Outside China, the memory chip industry is heavily consolidated into three companies, leaving Apple reliant on U.S. chipmaker Micron alongside South Korea’s Samsung and SK Hynix.

Blacklist Complications

The Pentagon has placed CXMT on its 1260H Chinese Military Company blacklist due to alleged connections to the People's Liberation Army.

While inclusion on the list creates reputational risks, it carries no formal legal ramifications that would bar Apple from purchasing the components.

The lobbying campaign follows a meeting between President Donald Trump and Chinese President Xi Jinping in Beijing last month.

Ahead of the summit, the U.S. held back from introducing new technology-related export controls that would affect Chinese companies.

The U.S. Commerce Department intended to place CXMT on its trade "Entity List" last year.

However, the White House ordered the department to hold off because the administration was in the midst of tough negotiations with China to reach a truce in the trade war.

Political Backlash

Congress is expected to object strongly if the administration blesses Apple purchases from CXMT, which positions itself as the Chinese national champion.

Apple previously faced a major backlash in 2022 when it considered buying memory chips from YMTC.

Marco Rubio, then the top Republican on the Senate intelligence committee, warned at the time that the company was playing with fire and would face unprecedented federal scrutiny.

Market Dynamics

Global DRam prices collapsed in 2023 because of a supply glut, allowing Apple to secure massive amounts of cheap inventory.

However, the artificial intelligence boom of the past three years has reversed fortunes for memory suppliers, creating a protracted shortage of traditional memory for consumer electronics.

It remains unclear if the administration will offer Apple any guarantees, particularly regarding whether the U.S. would later place CXMT on the Entity List.