April 1 news, after a production outage from a key Japanese partner exposed the risk of its global supply, Apple is exploring finding new suppliers for its iPhone memory chips, which may include the company's first Chinese chip supplier.
According to people familiar with the matter, after Qiao Xing Holdings lost a batch of products due to pollution in February this year, Apple is considering expanding the list of chip suppliers, which already includes Micron Technology and Samsung Electronics. While Samsung and SK Hynix may pick up the girdle of Apple's chip supply, Apple remains keen to diversify its supply network and offset further risks posed by the pandemic and shipping congestion, the sources said.
People familiar with the matter mentioned that Apple is now testing samples of NAND flash memory chips produced by Hubei Yangtze River Storage Technology Co., Ltd. Because the talks between the two sides were not made public, the sources were reluctant to reveal their identities. Apple has been in months of discussions with Yangtze River Storage about the partnership, but they have yet to make a final decision. It is reported that Changjiang Storage belongs to chip manufacturer Tsinghua Tsinghua Unigroup Group Co., Ltd.
If Yangtze Storage and its parent company can get a contract from Apple, it will be an important milestone for China, which wants to build its world-class chip industry at home. Memory is often a threshold for semiconductor companies looking to build a nationwide presence, as it relies on more capacity to produce than advanced processors and other logic chips, and also requires a huge investment.
In 2016, Changjiang Storage completed a merger with a government-run chip chief that was seen as China's best opportunity to design and develop domestically produced 3D NAND flash memory, which is widely used to store data from gadgets such as smartphones, laptops, servers and future electric cars.
Testing and discussion does not guarantee that Apple will definitely purchase chips from Yangtze River Storage. People familiar with the matter said it was unclear whether the company could convince Apple of its reliability. They say that Yangtze River storage technology is at least one generation behind the current most advanced level, and at most it can only become a backup option for Apple's major suppliers, such as South Korea's Hynix and Samsung. Even if Apple qualifies the company's components, it needs to measure its reliability in terms of yield and quality. BOE Technology Group Co., Ltd., for example, is another well-known Apple supplier that took years to mass-produce iPhone displays.
However, people familiar with the matter said that Apple may decide to use Changjiang Storage's products in low-end devices such as the iPhone SE. In this regard, representatives of Yangtze River Storage and Apple declined to comment.
Over the past two years, parts shortages and pandemic-related logistics problems have plagued Apple, the world's largest consumer electronics brand, prompting people to rethink their supply chains, which once relied on just-in-time inventory and a global network.
In February, two factories in Japan stopped production due to material contamination, highlighting the risk of over-reliance on a particular supplier. Industry tracker Trendforce estimates that this could lead to a 5 to 10 percent increase in flash chip prices in June.
The iPhone is mostly assembled by Foxconn and Pegatron in China, which take parts such as memory chips from dozens of different suppliers and then assemble them into the final device. Factory storage could provide an attractive source of low-cost chips close to its factory, while potentially garnering government support in the world's largest smartphone market.
Jeff Pu, an analyst at Haitong International Securities, estimates: "Yangtze River Storage will provide about 5% of the memory for the iPhone SE and 3% to 5% for the upcoming iPhone 14." Apple will use its products because the company offers competitive prices. ”
One of the sources said Changjiang Storage's products rely on a self-developed technology called Xtacking, which integrates storage unit wafers with supporting circuitry and, in some cases, perform better than traditional technologies.