Apple wants to use China-sourced chips for products sold in China during the AI-driven memory shortage, but a letter from US senators hopes to persuade Apple otherwise.
The hype cycle around what is basically a natural evolution of an advanced autocomplete engine has destabilized the global economy and supply chain. The ever-increasing demand for more components to build data centers has led to a global chip and component shortage.
Apple has looked to blacklisted Chinese companies to bolster its supply chain, but, according to a letter viewed by Bloomberg, US senators want to urge Apple away from this solution. They worry about various potential calamities like other companies following suit, potential national security issues, and yet another industrial exodus from the United States.
Apple has officially requested to buy from ChangXin Memory Technologies Inc. and has purchased chips, but not used them in products, from Yangtze Memory Technologies Co. The US senators have asked Apple to reconsider using chips from either company and commit to not using them by August 21.
The letter arrived only four days after Micron asked the White House to reject Apple’s plans.
Apple’s latest China problem
While Apple isn’t banned from buying chips from either company, it could face a few repercussions. First, the US Department of Defense could stop buying Apple products, even if the chips are only used in China-sold products, due to the Chinese Military Company Blacklist.
That’s only a drop in the bucket for Apple, but an important relationship that could be burned.
Apple could also face regulatory issues and increased pressure from the Trump administration. The company has already had to walk on eggshells to avoid the worst of the random and illegal global tariffs, and such a move could undo all of that overnight.
A possible Trump card
Alternatively, Apple could be attempting to play right into a developing situation where President Trump hopes to ease trade tensions with China. He is expected to meet with Xi Jinping in September, and offering Apple the blessing to build and sell using Chinese components could be quite the bargaining chip.
Apple has worked hard to keep Trump out of its business
However, the senators aren’t sure this would be a good idea:
“The limitation that CXMT memory would, for the moment, be confined to devices sold in China cannot be expected to hold, because once a part clears qualification for Apple production, extending it worldwide is a single procurement decision away,” they wrote in the letter to Apple. “The precedent Apple would set by addressing the memory shortage this way would shape the memory market and this country’s security for years after supply has returned to normal, and we urge you to weigh that carefully.”
Perhaps the senators could regulate the industry and attempt to stem the flood created by the far-fetched promises made by grifting billionaires. The memory shortage is tied to a bubble that is sure to deflate or pop at any time, which could be disastrous for the global economy.
When the AI boom ends, Apple sourcing chips for devices sold in China will be the least of our worries. We can only hope Senators Banks, Schumer, and the others will stop chasing distractions and target the root of the problem.
