The U.S. government put the brakes on Apple’s plan to use YMTC NAND flash chips in the iPhone. The Nikkei recently reported that Apple considered procuring 40 percent of the chips for use in the phone from the Chinese company for cost reduction and supply source diversification.

The U.S. Department of Commerce announced semiconductor equipment export restrictions on Oct. 7. According to the announcement, U.S. companies cannot export equipment to Chinese companies manufacturing 18-nm or more advanced DRAM chips, 128-layer or more advanced NAND chips, or 14-nm or more advanced logic chips. The department’s unverified list related to the ban includes YMTC. The department said that any transaction with a company on the list requires pre-shipment inspection and prior permission.

YMTC’s share in the global NAND flash market is still very low. Experts point out that the Chinese company lost its opportunity to boost the market share and the same applies to Chinese memory chip manufacturers as a whole. In this market, Samsung Electronics’ share is 33.3 percent, followed by SK Hynix (20.4 percent), Kioxia (16 percent), Western Digital and Micron Technology (13 percent each) and YMTC (3.4 percent). Apple has purchased iPhone NAND chips from SK Hynix and Kioxia.

Founded in 2016, YMTC is the only NAND flash manufacturer in China. Tsinghua Unigroup, the national semiconductor fund of China, and Hubei Province owns 51 percent, 24 percent and 25 percent of the company, respectively. It has received government subsidies of more than 28 billion yuan so far and it has tens of subsidiaries and affiliates in the semiconductor material, equipment and packaging sectors.

It is said that Apple picked YMTC as the third iPhone NAND chip supplier because its business is very large in China. More than 85 percent of Apple products are assembled in China and Apple China’s sales account for approximately 20 percent of Apple’s sales. In the fourth quarter of 2021, regardless of U.S.-China trade disputes, Apple topped the Chinese smartphone market in six years by recording a share of 23 percent.

Source: BusinessKorea