The U.S. ban hammer forced Apple to abandon all ties with Chinese NAND flash chip manufacturer YMTC, leaving the Cupertino firm to rely on Korean suppliers. Looking at the current DRAM crisis, which has also affected storage costs, this wasn’t the best of decisions as iPhone margins are being adversely affected, with Apple now estimated to pay $70 per LPDDR5X RAM chip.
While the company may absorb these cost bumps, it’s not the right play for its long-term strategy, which is why it is reported to source YMTC’s NAND flash chips, which will be reserved for iPhones sold in China. With this approach, not only will Apple maintain its margins, but it will also prevent any controversy from arising with the U.S. government. As for why YMTC is a suitable choice for iPhones, we’ve discussed the reasons below.
YMTC will be a preferred supplier for iPhone NAND chips as it has successfully produced 300-plus layer flash technology, closing the gap between Samsung and SK hynix
A report from Nikkei Asia talks in-depth about China’s strategy to achieve semiconductor independence, with the region apparently setting an internal target to obtain 80 percent self-sufficiency in its domestic sector. Just last month, both CXMT and YMTC were removed from The Pentagon’s restricted companies list, ultimately opening several doors for companies like Apple to form partnerships for NAND and DRAM supply.
It can be assumed that Apple will want to partner with YMTC to put pressure on the likes of Samsung and SK hynix, but the Chinese NAND flash manufacturer actually has an ace up its sleeve, which is technological prowess. The company’s Xtacking 4.0 technology has allowed it to mass produced 300-plus layer NAND flash, putting it in direct competition with Samsung’s 286-layer and SK hynix’s 321-layer NAND flash, effectively closing the gap.
YMTC’s technology also meets Apple’s standards, and selling iPhones in the domestic market with the latter’s NAND flash chips is an excellent way to avoid the wrath of the U.S. government. TF International Securities analyst Ming-Chi Kuo has also suggested that Apple’s iPhone 18 launch strategy should be to absorb DRAM costs, as its Services division will provide sufficient financial cushion.
In this manner, the technology titan can take advantage of the market chaos, cementing its growth to a point where even Samsung, its closest rival in the smartphone space, cannot compete with it.
News Source: Nikkei Asia
About the author: Omar Sohail is a reporter and analyst for Wccftech's mobile section, specializing in the technology and business of the mobile industry. His expertise lies in the intricate hardware supply chain, covering developments in semiconductor manufacturing, chip lithography, and camera sensor technology.
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