New CPA/CTT Report Highlights Dangers of Potential Apple Memory Chip Deal with Government-Subsidized Chinese Supplier

WASHINGTON — A new Policy Paper, co-written by Coalition for a Prosperous America (CPA) and China Tech Threat (CTT), highlights the dangers of an impending decision by Apple to begin using Chinese-made memory chips in the iPhone 14. The paper outlines how this creates security risks for Apple and the United States, and would risk destabilizing the memory chip market with the real possibility of a western chipmaker going out of business.

Memory chips would be the most sophisticated parts in an Apple iPhone that would be designed and manufactured by a Chinese company. Yangtze Memory Technology Company (YMTC) has invested billions of dollars in a race to build memory chips on par with Western companies. According to the report, YMTC has received $24 billion in subsidies from the Chinese government and is close to winning its first contract to supply Apple.

The Chinese semiconductor industry has struggled to manufacture chips on par with Western chipmakers. If YMTC breaks through with an Apple contract, with its high level of subsidies and connection to the Chinese government, Chinese memory chips could under-price Western memory chipmakers, and lead to the failure of a Western chipmaker. Micron Technology is the last remaining U.S.-owned maker of memory chips. There are only six major memory chip manufacturers in the world, led by Samsung.

YMTC’s success could raise serious security issues for the U.S. Memory chips are widely used in military, as well as civilian, devices. An Apple iPhone with YMTC memory chips raises serious issues of privacy, security, and sabotage for Western users and telecom networks. At a time when the U.S. Congress is debating enacting the CHIPS Act to rebuild the U.S. manufacturing capability in semiconductors, a victory by YMTC at Apple, one of the world’s most respected users of microchips, would undermine U.S. efforts to maintain and rebuild the U.S. chip industry.

The report calls for the U.S. government to use existing government policy tools to block Apple from agreeing to purchase YMTC memory chips.

“The center of gravity of the global semiconductor is moving steadily towards Asia and China,” said CPA Chief Economist Jeff Ferry. “A Chinese breakthrough in memory chips would lead ultimately to this crucial sector being dominated by Chinese state-subsidized, military-linked producers. The U.S. must defend its interests, invest in our own chip manufacturing industry and and insist that U.S. companies like Apple stand up for the U.S. industry and buy American not Chinese.”

“The U.S. government must take immediate action to block Apple from doing business with YMTC, because of the security and privacy threats which we outline in our report,” said China Tech Threat CEO Roslyn Layton. “The Department of Commerce has tools available now to take this action and we outline a path of action for Commerce in our report.”

The report is available on the CPA website here or the CTT website here.


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