Cheap Chinese chips could offer way out of RAM price crisis, Apple suggests

05/07 14:15 - Cheap Chinese chips could offer way out of RAM price crisis, Apple suggests
The RAM price crisis is pushing hardware manufacturers to pursue deals with Chinese companies, against the wishes of the US government. Apple is one of those reportedly exploring such deals. “Apple is in negotiations to purchase chips from Chinese semiconductor makers ChangXin Memory Technologies Inc. (CMTI) and Yangtze Memory Technologies Co. (YMTC) to help reduce the impact of a global memory shortage,” Bloomberg reported. “The companies are on a Pentagon blacklist of Chinese entities believed to support Beijing’s military, and Apple’s effort to buy chips from them has included appeals to Trump administration officials to help soften the political fallout,” it said. Rumors surrounding Apple talking with CMTI and YMTC have been going on for months, with analyst Ming-Chi Kuo pointing to Apple CEO Tim Cook being “one of the few tech leaders who can still navigate both Washington and Beijing, so this is better handled before he steps down as CEO.” Beyond the potential political ramifications, any deal would have immediate implications for enterprise IT buyers. “CIOs should focus on the risk that this strategy could introduce. Will Apple be able to thoroughly assess those chips to completely rule out the possibility of trojan horses, backdoors, and hidden functionality such as dead man switches?” asked Flavio Villanustre, CISO for the LexisNexis Risk Solutions Group. “If Apple says that they will do, to what degree of certainty? There have been rumors about hidden backdoors in chips before, such as Supermicro in 2018, ESP32 microcontroller hidden functionality in 2025, and Microsemi backdoor in 2012, to name a few.” On the naughty list? This issue gets complicated based on what the US government ultimately does. The two Chinese manufacturers figure on the Pentagon’s so-called 1260H list of “entities identified as Chinese Military Companies,” which also includes Chinese internet giants Alibaba, Baidu, and Tencent; router maker TP-Link Technologies; and drone maker DJI. Being on that list has no real consequences for the companies concerned, but the government could move them to the Department of Commerce’s Entity List, subjecting them to export licensing requirements, or make them the subject of a Section 889 clause, barring them from government procurement deals. That could sharply change the dynamics for Apple and other technology vendors seeking cheaper RAM supplies — and for their customers. Noah Kenney, principal consultant for Digital 520, said, “Currently, CXMT is only on the Pentagon’s 1260H list, which doesn’t legally bar transactions. Inclusion in the Commerce Department Entity List placement would, which is what Apple is seeking to prevent here.” He suggested Apple might try to limit blowback by only using the Chinese chips in Apple devices sold in China. If the government does intensify restrictions and if components from YMTC or CXMT “show up in a customer contract you already signed, a standard-issue device becomes a procurement compliance question. Fleet inventory in MDM will need to track memory sourcing, not just device model. That is a capability most enterprises do not have today,” Kenney said. “The real question for a CIO is not whether Washington pushes back on Apple, but whether their customers will push back for shipping Apple.” Other vendors use Chinese RAM already “Lenovo has sourced from Chinese memory makers for years,” as have other manufacturers, Kenney said. “The difference is that they are not lobbying the Treasury Secretary about it.” Geopolitical analyst Irina Tsukerman said Apple could clear the way for more vendors to use cheaper RAM. “If Apple absorbs the political criticism and keeps enterprise buyers comfortable, competitors would gain room to consider Chinese memory for selected markets or less sensitive product channels,” Tsukerman said. “If Washington turns Apple into an example, other manufacturers would become more careful around government-facing sales and reserve this kind of sourcing for places where US procurement pressure has less impact.” Tsukerman agreed with Kenney that IT departments will need to improve component visibility. “Enterprise CIOs should take this seriously because Apple’s reported sourcing discussions turn a normally invisible component decision into something that can affect procurement credibility, especially for buyers whose technology choices are reviewed through government or regulated-sector requirements,” Tsukerman said. The lack of a clear product quality issue is what will make this a delicate IT dance, Tsukerman said. “Engineers could see limited practical danger from memory sourcing alone, and procurement reviewers could still see a serious issue because the supplier has already been placed in a national-security category,” she said. This article first appeared on Network World. ...