After Washington tightened export curbs against Chinese technology businesses, U.S. tech giant Apple Inc (AAPL.O) postponed plans to utilise memory chips from Yangtze Memory Technologies Co (YMTC) in its products, the Nikkei said on Monday.
According to people familiar with the situation, Nikkei said that Apple had originally intended to begin using the NAND flash memory chips produced by the state-funded YMTC as soon as this year. Only iPhones sold in the Chinese market were supposed to employ the processors at first.
According to the article, the business was thinking about eventually buying up to 40% of the chips required for all iPhones from YMTC.
Analysts predict that the decision will have little to no impact on YMTC, one of the minor suppliers of memory chips to Apple.
The broader significance, according to CFRA Research analyst Angelo Zino, is that it prevents Apple from eventually further expanding its supply base by leveraging native China players and lowering its cost profile.
To produce items like the Airpods and new iPhones, Apple is shifting more production to Vietnam and India.
In pre-bell trading, shares of the iPhone manufacturer increased 1.6% to $140.59 along with broader market advances.
China’s leading memory chip manufacturer YMTC and 30 other Chinese organisations were last week added to a list of businesses that U.S. investigators have been unable to check, escalating tensions with Beijing and kicking off a 60-day clock that could result in even worse penalties.
The expansive set of export restrictions imposed on China by the Biden administration aims to halt Beijing’s scientific and military advancements by denying Beijing access to certain semiconductor chips produced anywhere in the world using American technology.
A Reuters request for comment was not immediately answered by Apple, while YMTC declined to comment.
