Apple Explores China Chip Deal Despite Pentagon Concerns

Apple is exploring a deal to buy memory chips from two Chinese semiconductor companies, CXMT and YMTC, in an attempt to reduce costs after a global memory shortage pushed the company to raise prices on Macs, iPads, and other devices.

The political complications are arguably the more interesting story here. Both CXMT and YMTC appear on the Defense Department’s 1260H list of Chinese companies suspected of ties to the People’s Liberation Army. YMTC carries an additional burden: it sits on a Commerce Department blacklist that bars U.S. companies from selling to it without an export license. Apple is not buying from YMTC in that sense, but the optics are not straightforward.

Tim Cook has already been working the phones. According to Bloomberg, Cook has spoken with Trump administration officials including Treasury Secretary Scott Bessent, and Apple is reportedly hoping to keep CXMT off the Commerce Department’s Entity List, a designation that would cut off the supplier entirely. Apple has proposed limiting the Chinese-sourced chips to devices sold in China, which would theoretically free up supply from other vendors for the U.S. market.

That framing is a familiar Apple move: structure the arrangement to look like a geographic carve-out rather than a wholesale shift in the supply chain. Whether the administration accepts that framing is another matter. Some officials are reportedly opposed to the deal, leaving the outcome genuinely uncertain.

This is not Apple’s first attempt to bring YMTC into its supply chain. Apple explored sourcing memory from YMTC in 2022 and backed away after congressional backlash. The underlying pressure driving the talks is the same now as it was then: chipmakers have shifted production capacity toward AI server chips, tightening supply and lifting prices for consumer devices.