Apple and Micron clash before Trump over Chinese memory chips

The Wall Street Journal reports that Micron is pressing the Trump administration to block Apple’s push to use memory chips from Chinese suppliers. Here are the details.

Apple’s Chinese chip plan would extend beyond China

Last month, just before Apple hiked prices for several of its products due to the ongoing memory shortage, Tim Cook gave an interview to The Wall Street Journal, where he suggested that the US should reconsider its decision to restrict access to certain Chinese suppliers.

In the days that followed, the Journal reported that Apple had already been seeking clearance from the administration to purchase chips from China’s ChangXin Memory Technologies (CXMT). At the same time, the Financial Times said Apple was in negotiations to purchase chips from Yangtze Memory Technologies (YMTC). The FT would go on to claim Apple was already testing DRAM chips from CXMT.

For context, CXMT and YMTC have been designated as Chinese military companies by the Pentagon, and YMTC is also on the Commerce Department’s Entity List.

This does not necessarily prohibit Apple from using their chips in products sold outside the US, but it has made any potential deal politically sensitive and prompted pushback against the company in the past.

Now, the Journal reports that as Apple has continued to push the Trump administration to approve the use of Chinese memory chips in products sold outside the US, rather than just in the Chinese market, it has faced opposition from Micron, which is lobbying officials to block the plan.

From the report:

In recent weeks, Apple Chief Executive Tim Cook and top executives have pitched Trump and officials including Commerce Secretary Howard Lutnick and Treasury Secretary Scott Bessent on a plan to use memory chips from China’s ChangXin Memory Technologies and Yangtze Memory Technologies in Apple products sold outside the U.S., people familiar with the discussions said.

Those arguments have been countered by Micron, the only sizable U.S. maker of memory chips. Micron executives including CEO Sanjay Mehrotra have warned Lutnick and other administration officials that allowing CXMT and other Chinese companies to sell to U.S. tech companies, regardless of the region of sale, could destroy the domestic industry the same way China played a role in decimating U.S. steel and manufacturing plants, the people said.

In a nutshell, the general argument against Apple’s plan is that sourcing memory from heavily state-subsidized Chinese suppliers, even if only for the Chinese market, could ultimately undercut US producers and weaken competition.

Additionally, the Journal reports that Micro says that it can help ease the shortage by accelerating construction of domestic plants and increasing US investment.

Just a few weeks ago, a Micron executive suggested that Apple’s aggressive purchasing tactics had helped fuel the memory shortage, telling the Journal that “a couple of [its] customers” had been “very aggressive with pricing” during the 2023 market downturn. He went on to argue that those rock-bottom prices discouraged investment in additional production capacity, helping lay the groundwork for today’s supply crunch.

Back to the report, the Journal says this dispute between Apple and Micron has put the Trump administration in an uncomfortable position, as “the lobbying fight will likely force Trump to choose between two of his top economic priorities: cutting prices for U.S. consumers and increasing domestic semiconductor production to reduce dependence on other countries.”

Apple, for its part, has spent the better part of the past two years touting investments such as its $600 billion American Manufacturing Program, along with deals with Intel and, more recently, a S30 billion agreement with Broadcom.

This spending has widely been seen as an effort to build goodwill with the administration, giving Apple political capital to offset controversial requests such as its push to source memory chips from restricted Chinese suppliers.

Micron, on the other hand, has seen its valuation follow the broader memory market. Its stock is up 191% year-to-date, and 727% over the past 12 months, though it has experienced considerable volatility in recent weeks. Shares are currently trading 23% below their late-June all-time high, and fell 6.99% today alone.

In a statement to the Journal, a White House spokesperson offered little direct indication of how the administration plans to square Apple’s and Micron’s competing priorities, saying only that it would pursue “investments and economic relief for the American people while safeguarding our national security.”

Do you think the Trump administration should let Apple source components from CXMT and YMTC? Let us know in the comments.

To read the WSJ’s full report, follow this link.