Future iPhones destined for Chinese market may draw upon local supplier for flash storage

If a new supply chain report is accurate, Apple is discussing a flash memory buy from Yangtze Memory Technologies for iPhones specifically destined for the Chinese market.

A report by the Nikkei Asian Review on Wednesday claims that the Chinese government-backed Yangtze Memory Technologies is in talks with Apple for future NAND supply. If the report is accurate, it will be the first Chinese supplier to produce memory for the iPhone, with any delivered product not expected until 2018 at the absolute earliest, as the first factory lines for the new company won't come fully on-line until then.

Citing unnamed sources, the report notes that full capacity and quality won't be possible until after 2020. Additionally, the publication claims that according to two other sources the chips would only be used for iPhones sold in the Chinese market — a first for Apple.

The company, previously known as both Yangtze River Storage Technology and Changjiang Storage is owned by state-supported Tsinghua Unigroup. At present, it is not known if the Chinese government is applying any pressure upon Apple to source locally, like the India government does as a condition to do business in the country.

Why Apple would make this move is not clear, nor is the accuracy of the report. Nikkei's track record from the supply chain overall is adequate, but its predictions on Apple's future specific plans, like where any given chip order is destined, are iffy.

6 Comments

gatorguy 24609 comments · 13 Years

About 6 years ago

Hmm...
Buying memory chips from a Chinese company only destined for Chinese iPhones, while Chinese chipsets are being touted as potential security issues by some US Government officials.

Interesting if true since it implies the Chinese Government has some involvement here. But as with many rumors it may not have much truth in it.

racerhomie3 1264 comments · 7 Years

Will this have security implications?
Does anyone have an idea?
Or maybe is this to reduce costs.

racerhomie3 said:

Will this have security implications?
Does anyone have an idea?
Or maybe is this to reduce costs.

Ummm... It's currently a rumor.

ksec 1502 comments · 18 Years

racerhomie3 said:

Will this have security implications?
Does anyone have an idea?
Or maybe is this to reduce costs.

No.

If you have been following the NAND and DRAM market, current prices are sky high. Hence why Samsung made record breaking profits. China has poured in tens of billions into the market, in the hope that by 2025 they will have at least 50% of computer component sourced within China. NAND and DRAM are first step into it as they are much easier. Fabs for SoC will follow after but dont expect they catch up to cutting edge anytime soon.

We dont know how this will turn out yet. Normally China's extremely aggressive race to bottom ( or below bottom ) should give its competitor some pressure. However non of these NAND Fabs are 3D Stack based. At least not initially, so it really depends how much they are willing to burn.

Of Course Apple has long been not happy with the NAND prices, one reason it throw money into the Toshiba NAND bidding process to secure enough NAND at reasonable price.

Samsung, SK, Micron, are all well prepared for this, they have been working hard on yield, transferring to 3D NAND as fast as possible at the expense of lower capacity.

P.S - What I am surprise though is they dare to approach Apple. I was thinking they will work with local supplier first. But Given how quickly BOE improves their OLED, may be DRAM is going better expected as well.

fallenjt 4056 comments · 13 Years

gatorguy said:

Hmm...
Buying memory chips from a Chinese company only destined for Chinese iPhones, while Chinese chipsets are being touted as potential security issues by some US Government officials.

Interesting if true since it implies the Chinese Government has some involvement here. But as with many rumors it may not have much truth in it.

You know the difference between memory chips and CPU right? In order to hard code the memory chip to make it functional for spying, you got to have it designed especially to fool the CPU into it. Good luck with that. Memory chip companies don't have any information on CPU and how they're interact. Besides, they don't design the chip, but manufacture based on Apple design. You probably don't know about a logistic audit. Every single chip made must be electronically serialized and logged into the manufacturing log sheet regardless the chip passes or fails final QC test. You can only charge customers on number of chips that pass the specs BUT, yeah big BUT here, you have to turn in every single chip ever made to the customer as a part of contract. I had a friend who worked for Philips before and he was in charge of that. Any missing chip would be considered a breach of contract and the lawsuits will follow. If the customer is the local Government, they will shut down your business.