Adding another 3D NAND maker to its supply chain is certainly something that is good for Apple, but U.S. legislators are not particularly happy that one of the world’s largest consumer electronics companies will use memory from YMTC and thereby essentially help China’s semiconductor industry to develop. Apple argues that it plans to use chips from Yangtze Memory only for iPhones to be sold in China.
Apple has been evaluating the use of 3D NAND from YMTC for months now, and last week a report emerged that the company finally decided to use flash memory from the Chinese manufacturer for its iPhones. The company confirmed to Financial Times that it has been considering using YMTC’s products for some of its smartphones sold in China, yet it did not confirm that these chips were used as of last week. There were no plans to use YMTC’s devices in smartphones sold outside of China, Apple is reported to have said. But the US lawmakers are still concerned about Apple working with Yangtze Memory.
YMTC is largely controlled by Tsinghua Unigroup, a company directly to the Chinese government via various banks and investment funds. It also has ties with Tsinghua University, funded by the Ministry of Education. As a result, YMTC is to a large degree a state-controlled company, which is a concern of US legislators. In fact, they accuse the Chinese government of illegally subsidizing YMTC, giving it a competitive edge over American makers of memory, such as Micron. This of course ignores the $76 billion Chips bill.
Another reason why US lawmakers are worried about YMTC is that it allegedly supplied 3D NAND memory and/or products to Huawei without obtaining an export license from the US Department of Commerce. As of 2020, everyone making products for Huawei using technologies developed in the US (hardware tools used in semiconductor fabs, electronic design automation tools used to develop chips, etc.) must obtain a license from the US Dof Commerce.
“YMTC has extensive ties to the Chinese Communist party and military,” said Michael McCaul, a congressman for Texas who sits in the House foreign affairs committee, in an interview with Financial Times. “There is credible evidence that YMTC is breaking export control laws by selling goods to Huawei. Apple will effectively be transferring knowledge and know-how to YMTC that will supercharge its capabilities and help the CCP achieve its national goals.”
Some lawmakers want commerce secretary Gina Raimondo to put YMTC on the entity list for its ties with CCP, and therefore ban it from getting US tools and software, according to the Financial Times’s sources.
While YMTC is a very competitive company that indeed has close ties with the Chinese government, it is only one of Apple’s suppliers from China. There are tens of companies from China that supply parts for Apple’s iPhones and other products. Actually, even some OLED screens for Apple’s smartphones are supplied by Beijing-based BOE Technology Group. That said, even without YMTC, Apple’s products are full of technology developed and made in China. That might change eventually as Apple shifts some of its production to India and other countries, but that will of course be a slow process.