Apple suspends plan to use memory chips made by China’s YMTC

October 18, 2022 (MLN): After becoming the latest target of US trade sanctions on the country’s advanced semiconductor manufacturing industry, Apple has suspended plans to use memory chips made by China’s largest memory chip maker Yangtze Memory Technologies Co (YMTC), as reported by Nikkie Asia.

The suspension comes as the state-owned chip maker was set to become one of the NAND flash memory chip suppliers for iPhones this year. YMTC’s 128-layer 3D NAND flash memory had already completed the months-long verification process of the US tech giant for use in iPhones, according to the report, which cited multiple sources.

If confirmed, the development would be a fresh blow for China’s top memory chip maker after it was put on a trade watch list by Washington.

The Bureau of Industry and Security, an agency under the US Department of Commerce, announced new export controls for China’s advanced semiconductor industry on October 7, a report by South China Morning Post noted.

These include restrictions on the involvement of “US persons” in developing chip facilities in China, and on equipment and materials shipped to Chinese wafer fabs that produce NAND flash memory chips with 128 layers or more.

YMTC, whose new chip has 232 memory cell layers according to Chinese state media reports, was among 31 Chinese entities added to Washington’s Unverified List on October 7, it added.

While the export restrictions do not directly forbid US companies from using advanced chips made by Chinese companies in their own products, the knock-on effects of the US sanctions are wreaking havoc across China’s semiconductor supply chain, it said.

The report further highlighted that YMTC was added by Apple to its list of NAND flash suppliers for the iPhone 14 in September. Apple had previously been using NAND flashes made by South Korea-based Samsung Electronics, SK Hynix, and Japan-based Kioxia.

The US tech giant had considered purchasing up to 40% of the chips needed for all iPhones from YMTC.

Marco Rubio, the Republican vice-chair of the Senate intelligence committee, warned Apple that it would face intense scrutiny “as it has never seen from the federal government” if it used memory chips made by YMTC, which pose “security risks”, it said.

YMTC controlled 5% of the global market for NAND flash memory chips in 2021, and its share had been expected to surpass 10% by 2027, according to industry research firm Yole Development.

Meanwhile, YMTC has been grappling with other fallout from US sanctions. Several top chip-making tool providers, including wafer fab equipment supplier Lam Research, and KLA Corp, which supplies process control systems for the semiconductor industry, have pulled US engineers out of YMTC, according to a Wall Street Journal report last week, citing sources familiar with the matter.

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