Apple is in talks with Yangtze Memory Technologies over a potential deal for purchase of storage chips from the Chinese state-backed semiconductor manufacturer, according to the Nikkei.
If the talks succeed and Apple places an order for NAND flash memory chips, it would mark the US tech giant’s first purchase from a Chinese memory chipmaker, the report noted.
Apple will use the chips in new iPhone models and other products for sale in the Chinese domestic market specifically, it said, citing sources familiar with the matter.
For Yangtze Memory, which is an affiliate of tech conglomerate Tsinghua Unigroup, a deal would represent a big coup even if the initial orders are small, Nikkei noted.
It would also mark a major achievement for the Chinese government which has been seeking to boost the domestic semiconductor industry.
Apple currently buys NAND flash chips for its iPhones from Toshiba of Japan, Western Digital of the US, and SK Hynix and Samsung Electronics of South Korea.
The US tech giant is the world’s biggest consumer of these chips, having accounted for about 15 percent of overall global demand in 2017, according to the report.
It is unclear if Apple is under any pressure to buy from Chinese makers, Nikkei said, while noting that Beijing has been known to apply pressure on foreign technology firms that want to operate within the country.
Yangtze Memory’s first factory lines, worth some US$24 billion, in the city of Wuhan are set to start production sometime in 2018.
Hence, the earliest that the deal could come into fruition will be 2019.
Some industry observers believe it is more likely to be after 2020 before Yangtze Memory can produce enough of the components at a standard that Apple requires.
Yangtze Memory was previously known as Yangtze River Storage Technology.
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