Apple Inc is exploring new sources of the memory chips that go into iPhones, including its first Chinese producer of the critical component, after a disruption at a key Japanese partner exposed the risks to its global supply.
It is considering expanding a roster of suppliers that already includes Micron Technology Inc and Samsung Electronics Co after Kioxia Holdings Corp in February lost a batch of output to contamination, people familiar with the matter said.
While Samsung and SK Hynix Inc — the world’s largest makers of flash memory — are likely to pick up the slack, Apple remains keen to diversify its network and offset the risk of further disruption from the COVID-19 pandemic and shipping snarls, they said.
Photo: Reuters
The iPhone maker is testing sample NAND flash memory chips made by Hubei-based Yangtze Memory Technologies Co (長江存儲), the people said, asking not to be identified discussing private deliberations.
Apple has been discussing the tie-up with Yangtze, owned by Beijing-backed chipmaking champion Tsinghua Unigroup Co (清華紫光), for months, but no final decisions have been made.
A contract for Yangtze and its well-connected parent would be a milestone for China’s ambitions to build a world-class domestic chip industry that can compete with the US.
For semiconductor players aspiring to build a business on a national scale, memory is typically a gateway, because production capabilities count more than the intricate designs needed for advanced processors and other logic chips — though it requires enormous investment to sustain.
Tying up with Yangtze could open Apple to criticism back home given ties between Washington and Beijing are fraying over China’s ambiguous stance on the Ukraine war, as well as US efforts to contain its technological ascent. US lawmakers have long railed against the way Beijing champions and subsidizes local industry.
Created through a merger with a government-run chip factory in 2016, Yangtze Memory is regarded as China’s best shot at designing and developing homegrown 3D NAND flash memory, widely used for storing data in smartphones, laptops, servers and future gadgets, such as electric vehicles. Beijing regards the crucial component as one of the bottlenecks that could endanger its economy, because of a heavy reliance on imports.
The testing and discussions are no guarantee Yangtze chips will ultimately ship. It is unclear if the Chinese firm can convince Apple of its dependability, the people said.
Yangtze Memory technology is at least one generation behind and could at best be a backup choice to Apple’s main suppliers like Hynix and Samsung, they said. Even if Apple qualifies Yangtze’s components, it will need to gauge its reliability in terms of yields and quality. It took years for Beijing-based BOE Technology Group Co, another prominent Chinese Apple supplier, to reach high-volume production of iPhone displays.
Yet because memory chips are largely commoditized, Apple could conceivably decide to use Yangtze’s product in lower-end devices, such as the iPhone SE, the people said.
Apple’s iPhones are put together primarily in China by Foxconn Technology Group (富士康科技集團) and Pegatron Corp (和碩), which take components like memory chips from scores of different providers before assembling them into the final device. Yangtze Memory could offer an attractive source of cheaper chips close to their plants.
“Yangtze memory will supply about 5 percent of memory for iPhone SE, and 3 percent to 5 percent of memory for the upcoming iPhone 14. Apple is using its product because it offers competitive pricing,” said Jeff Pu (蒲得宇), an analyst with Haitong International Securities (海通國際證券), working off theoretical estimates.
HANDOVER POLICY: Approving the probe means that the new US administration of Donald Trump is likely to have the option to impose trade restrictions on China US President Joe Biden’s administration is set to initiate a trade investigation into Chinese semiconductors in the coming days as part of a push to reduce reliance on a technology that US officials believe poses national security risks. The probe could result in tariffs or other measures to restrict imports on older-model semiconductors and the products containing them, including medical devices, vehicles, smartphones and weaponry, people familiar with the matter said. The investigation examining so-called foundational chips could take months to conclude, meaning that any reaction to the findings would be left to the discretion of US president-elect Donald Trump’s incoming team. Biden
INVESTMENT: Jun Seki, chief strategy officer for Hon Hai’s EV arm, and his team are currently in talks in France with Renault, Nissan’s 36 percent shareholder Hon Hai Precision Industry Co (鴻海精密), the iPhone maker known as Foxconn Technology Group (富士康科技集團) internationally, is in talks with Nissan Motor Co’s biggest shareholder Renault SA about its willingness to sell its shares in the Japanese automaker, the Central News Agency (CNA) said, citing people it did not identify. Nissan and fellow Japanese automaker, Honda Motor Co, are exploring a merger that would create a rival to Toyota Motor Corp in Japan and better position the combined company to face competitive challenges around the world, people familiar with the matter said on Wednesday. However, one potential spanner in the works is
HON HAI LURKS: The ‘Nikkei’ reported that Foxconn’s interest in Nissan accelerated the Honda-merger effort out of fears it might be taken over by the Taiwanese firm Nissan Motor Co has become the latest buyout target in Japan as it explores a merger with Honda Motor Co and faces an overture from Hon Hai Precision Industry Co (鴻海精密), known as Foxconn Technology Group (富士康科技集團) internationally. Shares in Nissan yesterday jumped 24 percent, the most on record, to hit the daily limit, after the two Japanese automakers acknowledged that talks are ongoing to better position themselves for competitive challenges during a time of upheaval in the global auto industry. Foxconn — a Taipei-based manufacturer of iPhones, which has been investing heavily in factories to build electric vehicles — has also
CHIP SUBSIDY: The US funding would help alleviate the financial pressure from building two fabs in the US and should lift gross margins in 2026, the company said GlobalWafers Co (環球晶圓), the world’s third-largest silicon wafer supplier, yesterday said it is to receive US$406 million in subsidies from the US Department of Commerce for two new US fabs under the CHIPS and Science Act, with the first batch of the funds likely coming next year. The grant represents 10 percent of the planned investments of US$4 billion in advanced semiconductor wafer manufacturing facilities in Texas and Missouri, GlobalWafers said. The commerce department is to disburse the funds based on the completion of project milestones over a multiyear timeframe, the company said. Along with the tax credit, which is equal to
RSS