Apple in talks to buy chips from China's CXMT, YMTC: Bloomberg

Apple is in talks to purchase chips from two Chinese memory chip companies on the Pentagon's blacklist, Bloomberg reported July 1 (local time).

Multiple sources said Apple is seeking to buy memory components from CXMT and Yangtze Memory Technologies Corp. (YMTC) for devices sold in China. The sources added that negotiations are ongoing and nothing has been finalized.

Sourcing chips from CXMT and YMTC would expand Apple's memory chip supplier base from three to five. The company currently relies on Samsung Electronics, SK hynix and Micron.

Apple CEO Tim Cook personally asked Donald Trump administration officials — including Treasury Secretary Scott Bessent — to help cushion any political fallout if a deal goes through, according to reports.

Both CXMT and YMTC appear on the Pentagon's "1260H list" of companies designated as supporting China's People's Liberation Army. Inclusion on the list does not trigger immediate legal sanctions, but it restricts companies from receiving US military contracts and research funding, serves as a warning signal to American investors, and is widely seen as a precursor to stronger trade restrictions.

Apple would not need formal US government approval to purchase chips from the two companies, Bloomberg said.

However, the move risks a fierce backlash from national security hardliners in the United States at a time of heightened tensions between Washington and Beijing over advanced technology. Some officials within the Trump administration have already voiced internal opposition.

The backdrop to Apple's sensitive overture is an unprecedented memory chip shortage triggered by the AI boom.

Surging demand for server memory — including DRAM and NAND flash — to build AI data centers has led major memory chip makers to cut supply for mobile and PC applications.

Apple cited soaring memory chip prices when it raised prices across its entire product lineup — including Mac, iPad, home devices and Vision Pro — on June 26.

Significant political obstacles remain before any deal with the Chinese companies can be concluded.

Rep. Brian Mast, chairman of the House Foreign Affairs Committee, pushed back sharply, calling CXMT and YMTC "Chinese military companies that support the Chinese Communist Party's military modernization and pursuit of AI dominance." He warned that a completed deal would "undermine the president's agenda of securing supply chains and winning the AI arms race."

YMTC in particular also appears on a separate Commerce Department blacklist — the Entity List — imposed in 2022, meaning any transactions with US suppliers require additional export licenses. Apple had previously attempted to source some memory from YMTC in 2022 but abandoned the effort for the same reason.