Apple to Partner with Chinese Semiconductor Firm for the First Time? "Reviewing YMTC Products"

Aftermath of Kioxia Incident... iPhone Memory Production
"Samsung Electronics and SK Hynix Expected to Increase Supply Volume"

[Image source=Reuters Yonhap News]

[Asia Economy Reporter Jeong Hyunjin] Apple is reportedly exploring new memory semiconductor suppliers for the iPhone, considering the possibility of selecting a Chinese company for the first time. While increasing supply volumes from domestic powerhouses like Samsung Electronics and SK Hynix, Apple is also reviewing products from rapidly growing Chinese memory semiconductor companies as part of its supplier diversification strategy.

On the 31st, Bloomberg News cited multiple sources reporting that after a reduction in semiconductor supply caused by a raw material contamination incident at Japanese semiconductor company Kioxia last month, Apple is considering increasing supply volumes from Samsung Electronics, Micron, and others. Sources said Apple is strongly committed to diversifying its memory network to offset risks arising from additional disruptions due to the pandemic or logistics issues.

Apple is currently testing NAND flash samples from China’s Yangtze Memory Technologies Co. (YMTC). YMTC, the largest Chinese memory semiconductor company and a subsidiary of Tsinghua Unigroup, is increasing its presence in the NAND market. According to market research firm Omdia, YMTC’s NAND business revenue in Q3 last year was $465 million (approximately 560 billion KRW), more than quadrupling in one year, with its market share rapidly growing to around 2.5% in Q3 last year.

[Image source=Reuters Yonhap News]

Bloomberg reported, "Apple has been in contact with YMTC for several months but has not yet reached a final conclusion regarding delivery," adding that the fact that both parties are discussing and testing does not guarantee that YMTC will supply memory semiconductors to Apple. Even if YMTC’s products are suitable for Apple, it must also assess whether yield and quality stability can be ensured. If Apple adopts YMTC’s products, they are likely to be installed in the budget smartphone iPhone SE.

Foxconn and Pegatron, the Taiwanese companies assembling iPhones, mainly have factories in China and bring in memory semiconductors during assembly. Therefore, it is analyzed that YMTC could offer products at a lower cost by reducing expenses.

However, Bloomberg analyzed that expanding exchanges between Apple and YMTC could face criticism from the U.S. political sphere, which has sought to contain China. Previously, the Biden administration halted plans by U.S. semiconductor company Intel to increase production of silicon wafers, a semiconductor material, at its factory in Chengdu, Sichuan Province, southwestern China, last November, citing security threats. Bloomberg evaluated, "If contracts between Apple and YMTC or Tsinghua Unigroup are finalized, it would be a tremendous event for China, which has been fostering its semiconductor industry to compete with the U.S. for semiconductor supremacy."