A few days ago, Apple announced an ugly mid-cycle price hike, blaming the worsening-by-the-day memory crisis. According to the Financial Times, the company is now lobbying the government for approval to buy memory chips from a Chinese company.
The company in question is CXMT, a Chinese chipmaker that the Pentagon added to its Chinese Military Company blacklist for alleged ties to the Chinese army.
So what exactly is Apple asking for here?
Apple is not legally barred from sourcing chips from a Chinese supplier. What it wants, however, is the White House’s nod to do so without the reputational and political risk of being seen as a partner to a Pentagon-listed company.
The Cupertino giant reportedly approached the Commerce Department more than a month ago. Since then, it has been working with contacts across the administration to secure the government’s blessing.
CXMT, already approved for listing on the Shanghai Stock Exchange, is China’s national champion in DRAM chip manufacturing, the same category of memory Apple currently sources from Micron, Samsung, and SK Hynix (via Notebookcheck).
Will Apple actually get the green light?
That’s far from guaranteed. John Moolenaar, the Republican chair of the House China Committee, told the FT the move would be a grave mistake.
The Commerce Department added CXMT to an intended Entity List package last year, only for the White House to hold it back during trade negotiations with China.
It’s worth noting that Apple already faced similar backlash in 2022, when it considered sourcing memory from another Pentagon-listed Chinese chipmaker, YMTC, for iPhones sold only in China.
From where I’m seeing this, Apple’s price increase on Thursday erased $263 billion from its market capitalization in a single day (its second-largest single-day drop), and the company might not want to risk its reputation any further, especially in the eyes of the government.
