Apple seeks US approval to buy chips from blacklisted Chinese memory firm CXMT

At a glance:

• Apple is reportedly seeking US government clearance to purchase memory chips from Chinese firm CXMT, which is on the Pentagon's restricted 1260H list.
• The potential deal aims to address ongoing global memory chip shortages that have already forced Apple to raise hardware prices.
• Congressional leaders have signaled opposition, warning that partnering with a Chinese military-linked company would be a "grave mistake".

Apple is pursuing permission from the Trump administration to source memory chips from Chinese manufacturer CXMT, which was added to the Pentagon's 1260H list of restricted entities in late 2024. The list identifies companies believed to be linked to the Chinese People's Liberation Army, effectively barring US government contractors from engaging with listed firms. While Apple is not legally prohibited from doing business with CXMT, securing official clearance would shield the company from potential sanctions or penalties.

The initiative stems from severe memory chip shortages affecting global tech supply chains, a crisis that has already impacted Apple's product pricing. In response, the company recently implemented significant price increases across its MacBook and iPad lines, with the 1TB M5 MacBook Pro seeing a $300 hike and all iPad Pros costing $200 more than prior week pricing. Tim Cook himself acknowledged the shortage's impact, stating Apple could no longer avoid the issue.

Apple's current memory chip suppliers include American company Micron Technology and South Korean firms Samsung and SK Hynix. The potential shift to CXMT represents a strategic pivot to diversify its supply base amid supply constraints. Apple reportedly approached the US Commerce Department about the matter a month ago and has been leveraging its Washington connections to navigate the approval process.

Congressional pushback is expected if the administration grants approval. John Moolenaar, who leads House investigations into China's geopolitical influence, told the Financial Times that partnering with a Chinese military company would constitute a grave mistake. His comments reflect broader concerns within Congress about enabling China's semiconductor ambitions while potentially compromising national security.

The 1260H list restriction specifically bars the Department of Defense from contracting with listed companies or using their products through third parties. While the list primarily affects government contracts, companies like Apple face indirect limitations when engaging with restricted entities. The Commerce Department must issue a license for Apple's proposed transactions, a process that requires balancing supply chain needs against national security considerations.

This development occurs amid heightened US scrutiny of China's semiconductor industry. Earlier in 2024, the Biden administration expanded restrictions on Chinese chipmakers accessing critical manufacturing equipment, a policy Apple's potential CXMT deal may inadvertently support. The company now finds itself navigating complex geopolitical waters where supply chain stability intersects with national security priorities.

If approved, Apple would become one of the first major US tech firms to source components from a 1260H-listed entity. The decision could set precedent for other multinational corporations seeking to circumvent supply bottlenecks. However, it also risks galvanizing further congressional scrutiny of Apple's supply chain practices and potential national security implications.