Due to stricter export controls imposed by the U.S. for Chinese-related products, Apple has reportedly been forced to abandon NAND flash memory chip shipments from supplier YMTC. The firm was expected to be a major player in Apple’s supply chain, and since it is out of the equation, the iPhone maker will have less leverage on companies like Samsung, SK Hynix, and others.
Apple Was Reportedly Going to Purchase Memory From YMTC That Would Make up 40 Percent of All NAND Flash Needed by iPhones
China’s YMTC was supposed to supply Apple with its 128-layer 3D NAND flash memory for use in iPhones before the U.S. government stepped in. According to a report published by Nikkei Asia, YMTC was backed by the Chinese government and would provide memory chips at a 20 percent reduced price compared to its competitors, which would have been music to Apple’s ears. This decision would have allowed the technology giant to put additional pressure on its other suppliers to bring down that price.
One of the sources told Nikkei Asia the following.
“The products have been verified, but they did not go into the production lines when mass production of the new iPhone began.”
iPhones with YMTC memory chips were initially planned to be limited to the Chinese market, but one source claims that Apple was going to source around 40 percent of all NAND chips that were going to be used in current and future iPhone models. Currently, no YMTC chips are used in any Apple products, but there might be hope in the future, according to Brent Fredberg, director of investments at Brandes Investment Partners in San Diego.
“Apple may continue wanting to use YMTC in the local market for China. But the way the regulations are set up currently, it's very unlikely that YMTC will even be able to supply the kind of NAND chips in a couple of years that Apple would want.”
The prospect of securing cheaper components for iPhones was sufficient enough for Apple to sign on YMTC, even though the report claims that the manufacturer was at least a generation or two behind the likes of Samsung and Micron. Unless the U.S. government relaxes those U.S. export controls, Apple will likely be relying on other suppliers, which may eat into its iPhone profit margins.
Image Credits - iFixit
News Source: Nikkei