Commerce secretary urges iPhone maker to find other solutions to AI-driven chip supply crunch
By Rolfe Winkler, Raffaele Huang and Amrith Ramkumar
The Trump administration doesn't want Apple to buy memory chips from China, Commerce Secretary Howard Lutnick said in an interview. Apple may do so anyway.
Insatiable demand for computer memory among companies building artificial-intelligence data centers has led to a shortage of the critical component and skyrocketing prices for what is available. The higher costs are causing Apple and other makers of consumer electronics to raise product prices significantly. To help alleviate the supply crunch, Apple is looking to Chinese manufacturers.
"The Trump administration is not in favor of that," Lutnick said in an interview after touring an Apple manufacturing facility in Houston. There have to be "other solutions to the memory issue, but it's not great American companies using Chinese memory."
Asked if he has relayed that message to Apple, Lutnick said "plainly."
Apple has been testing memory chips made by Chinese companies CXMT and Yangtze Memory Technologies, a prelude to potentially including them in Apple devices sold in China, according to people familiar with its efforts.
Laptop makers HP and Acer have started using memory chips from CXMT in devices sold outside the U.S., The Wall Street Journal has previously reported.
U.S. government rules require American companies to secure a license before sharing product information with CXMT and YMTC. The Chinese chip makers would need such information if they were to make customized chips for Apple. But Apple is free to buy off-the-shelf parts from the companies, and to negotiate prices with them.
Apple's chief operating officer, Sabih Khan, declined to confirm that Apple was testing Chinese memory chips in an interview Thursday. But he said that given the magnitude of the supply shortage, "we have to look at all options," including working with existing suppliers to increase U.S. production.
While Apple customizes many components inside iPhones, Khan said, "there isn't a lot of customization" for memory, alluding to the possibility that commodity Chinese memory chips could be used.
The comments highlighted a new point of tension between the Trump administration and Apple even as the two sides sought to promote their cooperation at Thursday's factory tour. As America's largest maker of devices, Apple can play an outsize role in reshoring manufacturing. It has taken steps to do so to win tariff relief from President Trump. Even so, it continues to invest far more in its foreign supply chain.
"Reshoring semiconductor manufacturing is a top priority for President Trump, whose policies have already secured hundreds of billions of dollars of investments in this key sector," White House spokesman Kush Desai said. "The Trump administration remains focused on delivering more investments and jobs for the American people while safeguarding our national security."
Idaho-based Micron Technology has asked the Trump administration not to let Apple use Chinese chips, arguing that such a move would harm domestic production and hurt the White House's goal of onshoring semiconductor manufacturing. Micron's own mammoth U.S. investment plans have given it leverage in discussions with the administration and lawmakers, putting Trump in the middle of a lobbying battle between two of the largest American businesses.
Senators from states where the memory chip makers have promised to expand, including New York, Indiana and Idaho, wrote a letter to Apple Chief Executive Tim Cook in late July urging Apple not to work with the Chinese companies.
Apple is not alone in asking for help with memory chips: Companies in industries from medical devices to automobiles have asked the administration for help to deal with the shortage. But there are few easy policy options to address the supply squeeze when it can take more than a year to build new capacity.
The Trump administration has used the threat of higher tariffs to push companies to reshore supply chains. Companies such as Apple have in turn promised to invest large sums domestically, though they have offered little clarity on how much they are dedicating to new manufacturing initiatives as opposed to already planned spending for existing U.S. operations.
The administration has won deals for Intel to make some of Apple's chips and a commitment from Apple to make all the cover glass for iPhones and Apple Watches in the U.S.
Even so, Lutnick, who is spearheading the administration's plan to increase domestic chipmaking, said the administration continued to press Apple to bring more production to the U.S.
"Relentlessly, more and more and more," he said, describing the pressure. "They've built their supply chains on low-cost labor. And now they need to build a supply chain on advanced manufacturing. Can Apple do it? Of course they can."
"You're going to see step by step, and piece by piece, they're going to bring significant portions of their business home," Lutnick said.
Most of Apple's supply chain is in Asia, and the company has been working with contract manufacturers to build new iPhone assembly plants in India.
Asked if Apple has any plans to bring iPhone production to the U.S., Khan pointed to efforts the company has already made, including commitments to spend tens of billions of dollars on made-in-USA chips for iPhones, as well as adding an assembly line for Apple's popular Mac Mini desktop computer in Texas. He also said Apple was focused on helping chip manufacturers reshore their supply chain end to end.