Apple Inc has put on hold plans to use memory chips from China’s Yangtze Memory Technologies Co (YMTC) in its devices, Nikkei Asia reported on October 17. The iPhone maker’s move comes days after the latest round of US export controls imposed against the Chinese sector and is a sign that Washington’s crackdown is creating a chilling effect down the supply chain.

US lawmakers have also warned Apple of intense scrutiny from Congress if it procures memory chips from the Chinese semiconductor manufacturer for the recently launched iPhone 14.

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According to the report, the company had originally planned to start using YMTC’s chips as early as this year which is at least 20% cheaper than those of its key competitors. The company was considering purchasing up to 40% of the chips required for all iPhones from YMTC.

Apple has already finished the months-long process to certify YMTC’s 128-layer 3D NAND flash memory for use in iPhones when the US government announced tighter export restrictions against China.

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‘NAND’ is flash memory, a key component found in all electronic devices such as personal computers, smartphones, and servers. 

Last week, the United States added China’s top memory chipmaker YMTC and 30 other firms to a list of companies that US officials have been unable to inspect, ratcheting up tensions with Beijing, starting a 60 day-clock that could prompt much tougher penalties.

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YMTC is being investigated by the US Commerce Department over whether it violated Washington’s export restrictions by selling chips to blacklisted Chinese telecom company Huawei Technologies Co Limited.

The Biden administration’s extensive set of controls on China is an attempt to slow Beijing’s technological and military advances by cutting the country’s supplies off from certain semiconductor chips made anywhere in the world with US equipment.

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Founded in 2016, YMTC is a government-funded company aimed to boost China’s digital economy. The potential deal with Apple was seen by the industry as a massive victory for China’s semiconductor sector, as it would improve its ability to supply quality products to top global brands. YMTC has been making efforts to reduce dependence on America’s chip making equipment and components since 2020.