The US Commerce Secretary has warned Apple against sourcing memory chips from Chinese suppliers, adding a fresh complication to the company’s ongoing struggle with a global component shortage. Commerce Secretary Howard Lutnick urged Apple not to buy Mac memory chips from Chinese manufacturers, despite the continuing supply crisis affecting the wider technology industry.
Apple has been testing memory chips from Chinese firm CXMT as a means of easing the current shortage. The politically sensitive move has now drawn a direct response from the Trump administration. Speaking after a tour of the new Apple Advanced Manufacturing Center in Houston, Lutnick told reporters, “The Trump administration is not in favor of that.”
He added that alternative solutions must exist, stressing that “It’s not great American companies using Chinese memory.” Asked whether the message had been passed to Apple directly, Lutnick confirmed it plainly.
Why the CXMT deal is problematic
Lutnick’s warning centres on Apple’s attempt to work around the high prices and tight supplies of memory currently affecting the entire sector. As part of that effort, Apple explored securing supplies from Chinese memory producers including CXMT.
The difficulty is that CXMT sits on the Chinese Military Company Blacklist, known as the 1260H list. This register identifies companies that the Pentagon believes hold links to the People’s Liberation Army and may pose a risk to US national security.
The list does not prohibit Apple from purchasing chips from CXMT, but it will affect sales. The Defense Department cannot enter agreements with listed companies, nor use products or services from third parties that rely on their components. There are also indications that CXMT could be added to the Entity List, a move that would block all trade with the company entirely. Should that happen, any supply line Apple established would be cut off, returning the company to its starting position.
Political and industry pushback
Apple petitioned the Trump administration on 27 June to allow it to buy Mac RAM chips from CXMT. It has since secured chips for testing and evaluated their performance. The plan has met with considerable resistance, however.
In July, US memory maker Micron lobbied the White House, arguing that permitting sales from blacklisted Chinese companies would be highly damaging. Micron contended that such a move would harm the US technology manufacturing industry in the same way that earlier competition affected American steel and manufacturing plants.
John Moolenaar, the Republican chair of the House China Committee, described a potential deal as a “grave mistake” back in June. In July, a group of US senators wrote to Apple in an attempt to persuade the iPhone maker to abandon the proposal.
CXMT, for its part, has rejected Apple’s request for a discount. It wants to be paid the same rate Apple pays Samsung for memory, reducing the commercial benefit of establishing the new supply line. On 10 August, it was reported that rivals HP and Acer already use CXMT memory in hardware sold outside the United States.
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Image: appleinsider.com
