Apple’s China chip gamble: Is it ready to bet on Pentagon-blacklisted CXMT and YMTC to win the AI race?

Published 25 July 2026 · tech

The AI revolution has created a new choke point: memory chips. Demand is surging even before supply, giving chipmakers the power to dictate prices. Companies

The AI revolution has created a new choke point: memory chips. Demand is surging even before supply, giving chipmakers the power to dictate prices. Companies are scrambling to secure capacity, turning memory into a strategic weapon in the global race for AI dominance. The tension is playing out at Apple, too. The company is in talks to buy chips from two Chinese semiconductor makers – ChangXin Memory Technologies Inc. and Yangtze Memory Technologies Co. (CXMT and YMTC) –that are on the Pentagon blacklist because of their ties to Beijing's military and state. Talks between Apple and the companies are ongoing, and nothing is final yet, sources close to the development told Bloomberg. Apple’s effort has included appeals by Chief Executive Officer Tim Cook to Trump administration officials, including Treasury Secretary Scott Bessent, to help soften the political fallout from any possible deal with the Chinese chipmakers, the report said.

Why is Apple looking for China-based chip makers? Apple’s logic is very simple. It claims its current suppliers are taking advantage of today’s tight memory market by charging excessive prices. As a result, Apple was forced to raise prices across its Macs, iPads, home devices, and Vision Pro, as it seeks to offset higher costs caused by the global memory chip shortage. A company spokesperson said that the rapid expansion of AI was to blame and that Apple had “never seen a component price increase this much, this quickly.” Currently, the company relies on South Korea-based market leaders Samsung Electronics Co. and SK Hynix Inc., along with US-based Micron Technology Inc., for memory needs across the range of mobile devices and desktop computing products it sells. Those Memory chipmakers are struggling to keep up with surging demand, especially from AI data centres.

Samsung and SK Hynix have pledged more than $880 billion to build two plants each and rapidly expand capacity. Micron, meanwhile, plans to invest billions more in US production. Buying chips from CXMT and YMTC would expand Apple’s roster of memory suppliers to five. Will Apple gamble on Pentagon-blacklisted suppliers to secure its AI future? It would be a high-stakes gamble for Apple. YMTC is already on the US Entity List. CXMT could be next. A US interagency committee approved its addition to the trade blacklist last year, but the Commerce Department has held off, Reuters reported. Once on the list, US companies need a licence to supply them with technology, software or goods. Those licences are usually denied. Congress is also weighing tougher curbs on both companies’ access to chipmaking equipment. But the Trump administration remains divided over how hard to crack down.