Apple Contemplates Utilizing Domestically Produced Flash Memory from China for Initial Time
Apple is reportedly considering adding a new memory chip producer to its roster following contamination issues at key NAND production facilities earlier this year. The tech giant is currently testing sample NAND flash memory from Chinese semiconductor Yangtze Memory Technologies, a Wuhan-based company established in 2016. Already working with Samsung and SK Hynix Inc., Apple is looking to diversify its supply sources to mitigate potential risks of supply shortages.
Discussions with Yangtze, backed by chipmaking giant Tsinghua Unigroup, have reportedly been ongoing for several months, although no deal has been finalized yet. Yangtze is attempting to convince Apple that they can deliver reliable components in the necessary volumes for Apple to meet its increasing product demand, as noted by Bloomberg.
While Yangtze's memory is reportedly a generation behind and might be used in entry-level devices such as the iPhone SE, it could potentially serve as a backup to Samsung, Toshiba, and Hynix, according to Bloomberg. Previous reports from 2018 suggested Apple might start purchasing NAND memory from Yangtze, but it's unclear what happened during those initial talks.
Apple may be under pressure to secure alternative sources for this critical component after Western Digital and Kioxia revealed in February that contaminated materials used in flash-memory chips had destroyed at least 6.5 exabytes, or over 6.5 million terabytes, of storage. The exact impact on Apple is unknown, but the estimated price increase of NAND, the main component of SSDs, is up to 10%.
The ongoing chip shortage has affected both the automotive and electronics industries for several years, causing price increases and making certain products hard to obtain. Companies such as Intel, Samsung, and TSMC have announced plans to establish massive factories in the US to boost semiconductor manufacturing in US soil, seeking to compete against China and alleviate supply chain issues.
In terms of US sanctions, Bloomberg reported in December that the White House considered tightening restrictions on sales of equipment to China's largest chipmaker, Semiconductor Manufacturing International Corp. Yet, so far, Apple's efforts to slow down China's technological progress have had little impact.
Additional insights:
- Supply Chain Diversification: By partnering with YMTC, Apple is diversifying its supply chain, reducing reliance on a single supplier. This move can enhance the stability of Apple's component supply during ongoing trade tensions and sanctions.
- Technical Advancements: YMTC's advanced 3D NAND memory chips, featuring 294 total layers and 232 active layers, could lead to improved performance and efficiency in Apple's products, such as higher storage capacities and faster data transfer rates.
- Market Competition: This partnership can influence the global NAND memory market, pushing other manufacturers (like Samsung and SK Hynix) to advance their own technological developments to maintain market competitiveness.
- Trade Restrictions Impact: Apple's decision to source from YMTC despite ongoing US sanctions could set a precedent for other companies engaging with Chinese semiconductor manufacturers, potentially altering the dynamics of global trade in the tech industry.
- Product Demand: The availability of high-quality NAND memory from YMTC could support Apple's product lineup, especially in devices that rely heavily on storage capacity and performance, leading to improved product offerings and increased demand.
Apple's contemplation of adding Yangtze Memory Technologies as a memory chip producer could help alleviate potential risks of supply shortages in the future. Despite discussions with Yangtze being ongoing for several months, no deal has been finalized yet. Yangtze is trying to demonstrate to Apple their ability to deliver reliable components in sufficient volumes to match Apple's increasing product demand.
Even though Yangtze's memory is reportedly a generation behind, it could serve as a backup to Samsung, Toshiba, and Hynix, especially for entry-level devices. Apple's interest in partnership with Yangtze could potentially lead to advanced 3D NAND memory chips with improved performance and efficiency in Apple's products.
By partnering with Yangtze, Apple is diversifying its tech supply chain, seeking to reduce its reliance on a single supplier and enhance component supply stability during ongoing trade tensions and sanctions. This move can also influence the global NAND memory market, prompting other manufacturers to advance their technological developments to maintain market competitiveness.
