Apple’s Cheap RAM Strategy Just Went Down in Flames
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Apple’s plan to deal with ever-rising memory prices by using chips from lower-cost Chinese supplier CXMT has gone down in flames. The company had hoped to use CXMT’s chips as leverage to convince its usual memory suppliers, Samsung and SK Hynix, to lower their prices. Instead, CXMT is looking to get the same price Samsung demands.
Apple has been scrambling to deal with quickly rising RAM and SSD prices. The device maker was forced in June to hike the price of seemingly everything from its MacBook Neo and Apple TV to the Mac Studio and Vision Pro from between $100 and $1,300 more than their previous prices.
One of Apple’s solutions included buying memory from Chinese suppliers CXMT and YMTC. Unfortunately for Apple, both of those suppliers are on the US government’s “blacklist” of suppliers, alongside scores of other Chinese companies on the list for multiple reasons, not the least of which are their ties to the People’s Liberation Army.
With memory growing more scarce every day, due to the demands placed upon the industry by AI companies, Apple lobbied the Trump administration to allow it to buy chips from the “no-fly zone” companies. Apple told the White House that it planned only to use the chips in devices intended for sale inside of China, which would free up chips from other suppliers, like Samsung and SK Hynix, for use in its devices intended for the United States and other countries.
Apple has faced pressure from all directions over the requests. A bipartisan group of US senators, led by Indiana Republican Jim Banks and New York Democrat Chuck Schumer, has urged Apple Inc. to drop its plans to buy chips from blacklisted Chinese semiconductor suppliers, warning that it could make the iPhone maker more reliant on a US adversary for crucial components.
Meanwhile, executives from Idaho-based Micron Technology attempted to raise concerns over allowing Chinese chipmakers to sell to US tech companies like Apple, saying it could “destroy the domestic industry.” Micron admittedly has a dog in this fight, as it supplies an estimated 30% of the memory components Apple uses in its devices, spread across everything from the iPhone to the Mac.
Now, Apple takes another hit in the seat of its pants, as Korean technology site Digital Daily reports that CXMT has rejected Apple’s discount demands. While Apple may still be forced to work with CXMT, it has certainly failed to get the discounts it has traditionally enjoyed due to its buying power.
While Apple can usually demand lower prices for higher quality, CXMT already has enough multi-year contracts in place to provide large volumes of chips to Chinese device manufacturers such as Huawei and Xiaomi for it not to need Apple.
That means CXMT has the leverage when it comes to negotiations, and instead of undercutting Samsung and SK Hynix prices, they want Apple to pay the same prices. With Samsung and SK Hynix both transitioning their production to manufacturing high-quality memory for AI data centers, rather than for devices such as smartphones, CXMT has become a major Chinese player in the smartphone memory market.
While many of the proposed data centers may never be built, freeing up memory, it won’t help Apple and other electronics manufacturers in the short run, as the type of memory used in those facilities cannot be converted into chips for devices like the iPhone or Mac.
RAM manufacturers say the DRAM market isn’t likely to see improvement until 2030, at which time Apple may once again be able to wheel and deal like it had in the past. But for the next four years or so, it’s going to be rough going.
