As the AI boom squeezes global memory chip supply, Apple’s potential partnership with CXMT faces significant geopolitical and market hurdles.
By Da Cheung
The global artificial intelligence boom is creating a severe shortage of traditional memory chips, forcing consumer electronics giants to seek unconventional solutions to keep their supply chains afloat.
Apple is currently testing memory components from China’s CXMT (688825.SH) (Changxin Memory Technologies) across product lines including iPhones and MacBooks, according to a report in The Wall Street Journal. The move highlights a desperate scramble for parts in a market upended by the AI revolution. During the company’s fiscal third-quarter earnings call on July 31, Apple’s outgoing CEO Tim Cook described the supply crisis as a “once-in-a-century flood,” noting that the company is evaluating all options to bring in new suppliers.
The core of the memory chip shortage lies in a massive industry pivot. Legacy memory leaders — including Samsung Electronics, SK Hynix, and U.S.-based Micron Technology — are rapidly shifting their manufacturing capacity toward High Bandwidth Memory (HBM), a specialized, highly profitable type of stacked memory crucial for powering AI servers. This pivot has severely squeezed the supply of traditional Dynamic Random Access Memory (DRAM), the standard memory used to handle active tasks in everyday consumer devices like smartphones and personal computers.
A shift in bargaining power
Apple’s legendary ability to dictate terms to its suppliers is facing a rare stress test. The tech giant recently attempted to negotiate lower prices for mobile DRAM with CXMT but was rejected, according to a report by South Korean outlet Digital Daily. The outlet said that CXMT, which made a blockbuster IPO on Shanghai’s STAR Market in July, refused to budge, maintaining prices on par with or even higher than those of legacy suppliers.
CXMT is China’s largest DRAM producer and the world’s fourth largest by production capacity. Its strong negotiating position is heavily bolstered by guaranteed, long-term orders from Chinese tech giants like Huawei and Xiaomi (1810.HK). These domestic companies are aggressively securing local supplies to insulate themselves from ongoing U.S. sanctions. With a captive domestic market absorbing its output, CXMT has little incentive to bow to Apple’s demands for steep discounts.
This dynamic has neutralized Apple’s traditional strategy of using cheaper Chinese components as leverage to force price reductions from its primary suppliers. Instead, the supply shortage has shifted pricing power firmly back into the hands of memory manufacturers.
Navigating Washington’s red tape
To integrate CXMT into its supply chain, Apple is attempting a delicate geopolitical balancing act. Multiple supply chain sources indicate Apple plans a “regional isolation” strategy, intending to use CXMT chips exclusively in devices sold within mainland China.
This approach serves two purposes. First, it frees up capacity from Samsung, SK Hynix, and Micron to supply Apple’s devices in the U.S. and other global markets. Second, it attempts to minimize political and regulatory risks in Washington.
However, the strategy faces intense political scrutiny. CXMT is currently on the U.S. Department of Defense’s “1260H List” of companies with alleged ties to the Chinese military. While this designation restricts U.S. federal and military procurement, it does not ban private commercial deals, although it creates massive reputational and compliance risks for U.S. multinationals. Apple is reportedly lobbying the U.S. government for written assurances that CXMT will not be escalated to the Commerce Department’s Entity List. Inclusion on the list would effectively ban all business ties and the transfer of technology — such as sharing technical details to configure chips for Apple’s hardware.
But its efforts are encountering stiff resistance. A bipartisan group of U.S. senators has sent a joint letter to Cook citing national security concerns, demanding Apple commit to not sourcing chips from CXMT. Meanwhile, Micron is actively lobbying against Apple’s plan, expressing concerns that integrating Chinese chips could undermine its own domestic expansion projects in the U.S.
A bifurcated memory market
Despite the geopolitical hurdles, CXMT is rapidly transitioning from a domestic substitute to a validated global player. The company is already supplying memory chips to major PC makers including HP and Acer for devices sold outside the U.S., helping to ease their supply shortages.
Industry analysts view Apple’s testing of CXMT components as a significant market signal. A recent Citi Research note said that Apple’s interest serves as a “vote of confidence” that redefines CXMT as a credible global manufacturer. The company is aggressively expanding its production capacity, which is projected to rival Micron’s monthly output by the end of 2026. Some Chinese media reports claim CXMT is already sending clients samples of next-generation LPDDR6 chips — low-power random-access memory (RAM) built for high data speeds and low battery used in advanced smartphones, thin laptops, and AI.
Ultimately, the shifting dynamics are creating a bifurcated market. As CXMT absorbs the demand for traditional consumer DRAM, legacy leaders like Samsung and SK Hynix are freed to monopolize the highly profitable AI memory sector.
For regular consumers, the fallout of this “memory war” is clear. With prices for traditional chips continuing to surge and supply remaining tight, the cost of manufacturing everyday electronics is climbing — a burden that will inevitably be passed on to buyers globally in the coming months.
Feature photo: Illustration of Tim Cook and CXMT by Mid Journey.
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