EXCLUSIVE: Bloomberg: Senators Warn Apple not to Buy Memory from Chinese Companies

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EXCLUSIVE: A bipartisan group of US senators urged Apple Inc. to abandon any efforts to buy chips from blacklisted Chinese semiconductor suppliers CXMT Corp. and Yangtze Memory Technologies Co., warning that the iPhone maker risked becoming reliant on a US adversary for crucial components.

In a letter addressed to Apple Chief Executive Officer Tim Cook, the senators said the company should refrain from using memory chips from CXMT and YMTC in its devices, even if the products are destined exclusively for the Chinese market. The lawmakers, led by Indiana Republican Jim Banks and New York Democrat Chuck Schumer, highlighted that both CXMT and YMTC are on a recently updated Pentagon list of Chinese entities believed to support Beijing's military.

"This short-sighted move would be a mistake, and it would ensure the world's most valuable consumer-electronics company grows dependent on critical supplies from a firm the United States government has formally designated as a Chinese military company," the senators wrote. Other signers included Democrats Andy Kim and Jeanne Shaheen, as well as Republicans Mike Crapo and Pete Ricketts.

Apple has been in negotiations to acquire chips from CXMT and YMTC as it grapples with a global squeeze on supplies that's caused memory prices to soar, fueled by unprecedented demand from makers of AI processors including Nvidia Corp. In June, Apple raised prices of all its Macs, iPads, home devices and the Vision Pro, attributing the increases to the memory chip shortage.

Spokespeople for Apple didn't immediately respond to a request for comment on the letter.

The objections from national security hawks in Washington are unsurprising, given the heightened tensions between the US and China over advanced technology. The debate is unfolding as President Donald Trump prepares to meet his Chinese counterpart Xi Jinping for a summit in the US in September where the two sides will discuss critical issues, including export controls on chips and rare earths.

The senators' pushback pits them against a US tech champion that this week reclaimed its status as the world's most valuable company and whose CEO has forged a close relationship with Trump. Apple has been seeking the blessing of senior Trump administration officials including Treasury Secretary Scott Bessent in its bid to buy chips from the two Chinese firms.

Senators tried to dismantle the idea that allowing Apple to buy Chinese memory would decrease prices, citing analysis that CXMT's pricing is sometimes higher than its competitors. Even if prices were lower, Apple would create a national security risk by qualifying the products for use in its devices, they said.

"The limitation that CXMT memory would, for the moment, be confined to devices sold in China cannot be expected to hold, because once a part clears qualification for Apple production, extending it worldwide is a single procurement decision away," they wrote.

Many of the lawmakers who signed the letter hail from states including New York, Indiana and Idaho where US and Korean memory makers Micron Technology Inc. and SK Hynix Inc. are investing billions of dollars to expand manufacturing capacity. An influx of cheap memory from China could imperil those projects - which already required US government incentives under the 2022 Chips and Science Act to be viable.

If Apple procures Chinese memory chips, it "would function as a signal that other buyers follow," the senators wrote and arrive "just as workers in Indiana, Idaho, New York, and Virginia carry out the largest expansion of domestic memory production in a generation."

SK Hynix is poised to invest about $4 billion in an advanced-packaging facility in West Lafayette, Indiana. Meanwhile, Boise-based Micron plans to spend $250 billion on projects in New York, Idaho and Virginia, seeking to create 90,000 jobs and eventually produce 40% of its dynamic random access memory products in the US.

Micron's Chief Executive Officer, Sanjay Mehrotra, has been forging his own relationship with Trump. Mehrotra attended a White House event earlier this month for the Trump-branded kids' savings accounts and earned the president's praise in several Truth Social posts.

The senators also asked for information about what Apple has shared with CXMT in its efforts to qualify the memory chips. Though Apple doesn't need US permission to buy products from the company outright, under Bureau of Industry and Security export control rules, all controlled items - including blueprints and technical information - sent to advanced chipmaking factories in China require a license from the Commerce Department, with such requests set to be denied in most cases.

Even though CXMT - which went public in a blockbuster IPO earlier this week in Shanghai - is not named in the BIS regulations, it operates advanced-chipmaking facilities. YMTC is also on a Commerce Department blacklist that restricts all controlled items from flowing to the company. Apple had sought in 2022 to source some of its memory supply from YMTC, but that effort was derailed by opposition in Washington.

The senators asked Apple to commit by Aug. 21 to avoid incorporating CXMT or YMTC memory into its products. They also asked for more information related to intellectual property transfer, the status of Apple's qualification of CXMT and YMTC components and whether the company has asked US or South Korean memory makers for priority allocation.

"The precedent Apple would set by addressing the memory shortage this way would shape the memory market and this country's security for years after supply has returned to normal, and we urge you to weigh that carefully," the senators wrote.

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