Apple is reportingly considering adding to its fleet of memory chip producers after contamination at key NAND production facilities earlier this year.
The tech giant is now testing sample NAND flash memory from Chinese semiconductor Yangtze Memory Technologies, a Wuhan-based company founded in 2016. Apple already works with Samsung and SK Hynix Inc. but is looking to further diversify in an effort to mitigate the risks of supply shortages, according to a Bloomberg report, citing an unnamed source.
Discussions with Yangtze, a newcomer backed by chipmaking giant Tsinghua Unigroup, have reportedly been ongoing for several months, though a deal has yet to be finalized. The semiconductor is reportedly convincing Apple that it can make dependable components at the scale necessary for the Cupertino-based company to fulfill increasing product demand. As Bloomberg notes, Yangtze’s memory is at least a generation behind and could be used in entry-level devices like the iPhone SE or as more of a backup to Samsung, Toshiba, and Korean supplier Hynix.
This isn’t the first time we’ve heard about Apple potentially turning to China for NAND memory for the first time. In 2018, Nikkei reported that Apple would start purchasing from Yangtze. It’s unclear what happened during those initial talks but it seems the option is now back on the table.
“Yangtze memory will supply about 5% of memory for iPhone SE, and 3% to 5% of memory for the upcoming iPhone 14. Apple is using its product because it offers competitive pricing,” Jeff Pu, an analyst with Haitong International Securities, predicted, according to Bloomberg.
Apple may feel increasing pressure to find alternative sources for this critical component after Western Digital and Kioxia revealed in February that contaminated materials used in flash-memory chips ruined at least 6.5 exabytes, or more than 6.5 million terabytes, of storage. What direct impact the incident had on Apple is unclear, however, the price of NAND—the main component of SSDs—is estimated to increase by up to 10%.
An ongoing supply shortage for chips has crippled the automotive and electronics industry for the past few years, causing the price of certain products to increase and making others nearly impossible to purchase. Intel, Samsung, and TSMC have revealed plans to build massive factories in the United States as the Biden administration attempts to bring semiconductor manufacturing to U.S. soil as a way to compete against China and alleviate supply chain shortages.
According to a December Bloomberg report, the White House considered doubling down on rules that restrict the sale of equipment to China’s largest chipmaker Semiconductor Manufacturing International Corp as a means of limiting the country’s ability to produce computer chips. So far, America’s attempts to slow down China’s technological progress have had little impact on Apple.