Apple's Bid to Use Chinese Chipmaker as Leverage Backfires

Apple's attempt to use Chinese memory maker CXMT as leverage against Samsung Electronics and SK Hynix has backfired, with the two Korean chipmakers ending up with more pricing power rather than less, DigiTimes reports, citing South Korean and Chinese trade press. This year, Apple has explored CXMT and fellow Chinese chipmaker YMTC as potential DRAM suppliers, and had progressed to testing CXMT's chips as memory shortages pushed up the cost of almost all Apple devices. Apple hoped a credible Chinese alternative would pressure Samsung and SK Hynix into cutting their own prices, a tactic it has used before with OLED suppliers and contract manufacturers. CXMT is barred from EUV lithography tools under U.S. export controls, so it has to rely on older DUV equipment that, per a cost analysis cited by TechTimes, requires around 30% more wafer starts to produce the same output. That extra cost means matching Samsung and SK Hynix's prices is CXMT's floor, not a discount it's able to offer, so when Apple pushed for a lower LPDDR5X quote, CXMT turned it down and held pricing at or above the Korean suppliers' own rates. With that threat neutralized, Apple seemingly lost its main point of leverage. Digital Daily reports that Chinese device makers Huawei and Xiaomi have already locked up most of CXMT's output through long-term, high-price contracts, so the company doesn't need Apple's business badly enough to negotiate. The result is the opposite of what Apple wanted; without a credible cheaper alternative to point to, Samsung and SK Hynix face less pressure to lower their own prices, at the same time they're shifting production toward high-bandwidth memory for AI servers and tightening the broader DRAM supply. The setback comes after Apple's CXMT plans drew pushback, with politicians demanding Apple commit to not buying Chinese memory chips at all.Tags: China, DigiTimesThis article, "Apple's Bid to Use Chinese Chipmaker as Leverage Backfires" first appeared on MacRumors.comDiscuss this article in our forums