Apple Tests China’s CXMT Memory Chips for iPhones, Macs, Raising Pressure on Samsung and SK Hynix

"Samsung and SK Hynix Risk Losing Chip Pricing Power"

Apple is testing memory chips from China’s ChangXin Memory Technologies, or CXMT, in major product lines sold in China, including iPhones and MacBooks, the Wall Street Journal reported on August 9. The move appears aimed at easing memory shortages and pressure from rising chip prices. It could directly weigh on the earnings, pricing power and share prices of Samsung Electronics and SK Hynix, according to the report.

Apple is seeking prior White House approval to adopt CXMT chips. US export-control rules imposed under President Donald Trump’s administration bar American companies from sharing technical information with CXMT, including product specifications. The Journal said Apple is trying to navigate those restrictions by buying off-the-shelf chips that CXMT already makes, rather than custom semiconductors tailored for products such as the iPhone, and then negotiating prices.

The report emerged with a little more than 10 days left before a deadline set by US lawmakers. In a July 29 letter to Apple, six senators from both parties, including Republican Jim Banks and Democrat Chuck Schumer, told the company to pledge by August 21 that it would not use semiconductors from CXMT and Yangtze Memory Technologies. US lawmakers argue that using Chinese chips even only in products sold in China would still pose serious security risks.

Concerns in Washington have been particularly sharp because CXMT is on the US Department of Defense’s "1260H list" of companies identified as supporting China’s People’s Liberation Army. Inclusion on the list does not bring immediate legal sanctions. Still, it is considered a stepping stone to tougher trade restrictions because it can limit future contracts with the US military and serve as a warning signal to investors.

Apple is moving quickly because the recent boom in artificial intelligence data-center construction has worsened chip shortages and driven prices sharply higher. The company has already raised MacBook and iPad prices by $100 to $300. It has also asked the Trump administration to allow it to use Chinese-made semiconductors in products sold outside the US as it tries to ease cost pressure.

CXMT’s market position is expanding rapidly despite scrutiny from the US government and Congress. Global PC makers including HP and Acer have already started using CXMT DRAM chips in laptops and PCs sold outside the US. CXMT has entered mass production of DDR5 and LPDDR5X memory built on a 15- to 17-nanometer process, according to the report. That means the company has moved beyond lab-stage prototypes to sustained factory output at consistent quality.

A 15- to 17-nanometer process is not cutting-edge, but it is still commercially competitive in the memory industry. As of the second half of last year, CXMT had begun mass production of DDR5 products with speeds of 8,000 Mbps and LPDDR5X products with speeds of 10,667 Mbps, the report said. That is enough to meet baseline performance requirements for the latest servers, AI accelerators and high-performance mobile devices.

What South Korean investors are watching most closely is high-bandwidth memory, or HBM. CXMT has also moved to challenge Samsung Electronics and SK Hynix in the HBM market, which the two South Korean companies dominate, drawing attention from global big tech companies. Industry sources expect CXMT to devote 20% of its DRAM wafer capacity this year to HBM3, the fourth generation of high-bandwidth memory. On the ground, the view is that the technology gap with South Korean rivals has narrowed to less than three years from HBM3 onward, from about four years in earlier generations.

A packaging facility under construction in Shanghai is also intended for future HBM mass production, according to industry accounts. CXMT has said it began supplying HBM3 samples in the second half of last year to Chinese AI chip designers including Huawei, and it has set a goal of mass-producing HBM3E by 2027. Early yields and reliability may prove challenging, but there is little disagreement in the industry that the effort itself could become a threat, much as DDR4 once did.

CXMT’s rapid rise has also jolted Samsung Electronics and SK Hynix, South Korea’s two biggest memory-chip makers. After CXMT surged 460% on its first trading day last month on Shanghai’s STAR Market, often called China’s Nasdaq, and became the most valuable company in China’s stock market, shares of Samsung Electronics and SK Hynix slumped more than 10% on the Kospi, triggering sidecars that halted program trading for 20 minutes.

CXMT raised 57.9 billion yuan, or about $8.1 billion, in its initial public offering by issuing 6.688 billion new shares at 8.66 yuan apiece. Including an overallotment option, the share sale could increase to as many as 7.69 billion new shares, lifting proceeds to 66.61 billion yuan, or about $9.3 billion.

One industry official said Apple’s willingness to keep open the option of sourcing memory chips from CXMT could make competition in the global memory market even more complex. If CXMT expands supply, the official added, Samsung Electronics and SK Hynix could gradually lose some of the pricing power and market leadership they have long enjoyed.

Kang Kyung-ju, Hankyung.com reporter qurasoha@hankyung.com