A Bloomberg article claims that Apple has been searching for a third source of NAND memory chips for its devices. Samsung is Apple’s primary supplier, followed by SK Hynix. The Cupertino-based corporation is reportedly interested in the Chinese semiconductor Yangtze Memory Technologies, according to people with knowledge of the situation.
After a supply outage at a major Japanese partner highlighted the dangers to Apple’s worldwide supply, the company is looking at other suppliers of memory chips for its iPhones, including its first Chinese maker.
According to sources familiar with the subject, the company is contemplating adding Micron Technology Inc. and Samsung Electronics Co. as suppliers after Kioxia Holdings Corp. lost a batch of production to contamination in February. While the world’s major flash memory manufacturers, Samsung and SK Hynix Inc., will likely take up the slack, Apple is still looking to diversify its network and reduce the risk of more interruption from the pandemic and shipment snarls, they added.
Apple has yet to approve any samples the manufacturer has previously supplied, according to other sources. All conditions are said to have been satisfied. In May, NAND chips will be shipped for the first time.
In contrast, Yangtze’s memory chip design is one generation behind Samsung and other memory chip vendors. As a result, Apple’s entry-level devices, like as the iPhone SE from this year, will have Yangtze’s NAND memory.
There is no assurance that Yangtze chips will go into production after all the testing and debate. Sources say they are unsure whether the Chinese company can persuade Apple of its trustworthiness. Experts say that Yangtze Memory’s technology is at least a generation behind Apple’s key suppliers, Hynix and Samsung. However, even if the Yangtze components are certified by Apple, they must be tested for yields and quality. Beijing-based BOE Technology Group Co., another well-known Chinese supplier to Apple, took many years to achieve high-volume manufacture of iPhone screens.
However, Yangtze’s memory chips might be used in lower-end handsets like the iPhone SE, according to the persons cited. There was no response to requests for comment from either Yangtze Memory or Apple.
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Two years of component shortages and Covid-related logistical challenges have prompted a reconsideration of supply chains that traditionally depended on just-in-time inventories and worldwide networks. For the second time this year, Kioxia was forced to suspend production at two factories in Japan owing to material contamination. According to Trendforce, this might contribute to an increase in flash memory chip costs of 5% to 10% in the June quarter.
Almost all of Apple’s iPhones are assembled in China, notably by Foxconn Technology Group and Pegatron Corp., who source various parts, such as memory chips, from a wide range of suppliers before putting them together in the final product. It’s possible that Yangtze Memory will provide a lower-cost supply of chips near to their manufacturing facilities.
It will contribute roughly 5% of the iPhone SE’s memory and 3% to 5% of the memory for the iPhone 14, which is expected to be released next year. Jeff Pu, an analyst at Haitong International Securities, predicted that Apple’s product is being used due of its competitive cost.
Yangtze’s partnership with the Chinese government might help it gain a foothold in the world’s most populous smartphone market.
A careful balancing act has been achieved by Apple in China, a country that underlies most of its $2.9 trillion worth as the largest manufacturer and one of the largest buyers of iPhones. As a result, Apple has become one of the most lucrative American companies operating in China, a nation that has effectively stifled the likes of Alphabet Inc.’s Google and Facebook Inc.’s social networking platforms.