Apple has dropped plans to buy memory chips from one of China’s top chipmakers after the U.S. government imposed tighter export controls on the Chinese tech sector, reports Nikkei Asia.
The move comes amid the latest round of U.S. export controls imposed against the Chinese tech sector and is a sign that Washington’s crackdown is creating a chilling effect down the supply chain.
Apple had already completed the monthslong process to certify YMTC’s 128-layer 3D NAND flash memory for use in iPhones when the U.S. government unveiled the tighter export restrictions against China early this month, multiple sources said.
The 128-layer 3D NAND flash memory chips from Yangtze Memory Technologies (YMTC) were intended for use in iPhones sold in the Chinese market, with the possibility of eventually purchasing up to 40% of the chips needed for all iPhones.
Washington officials earlier this month added YMTC and 30 other Chinese entities to an “Unverified” list of companies that U.S. officials have been unable to inspect. U.S. companies are not allowed to share any design, technologies, documents, or specifications with companies on the Unverified List without a license.
“The products have been verified, but they did not go into the production lines when mass production of the new iPhone began,” one of the sources told Nikkei Asia.
YMTC is being investigated by the U.S. Commerce Department over whether it violated Washington’s export controls by selling chips to Huawei, which the U.S. has already blacklisted.
“Apple may continue wanting to use YMTC in the local market for China. But the way the regulations are set up currently, it’s very unlikely that YMTC will even be able to supply the kind of NAND chips in a couple of years that Apple would want,” said Brent Fredberg, director of investments at Brandes Investment Partners in San Diego.