00:00The United States is trying to block Chinese semiconductors by any means, but Apple has
00:04taken a stand against this. There have been continuous reports that Apple is trying to
00:07use China's Changshin memory. As a result, Apple is facing a lot of criticism even within the
00:12United States. Recently, it was reported that Apple is testing Changshin memory chips in
00:16various product lines, including the iPhone and MacBook. In fact, it's not just about testing.
00:21It's also reported that Apple has entered into an initial supply agreement to receive
00:24general purpose memory from Changshin memory. Apple is reportedly exploiting regulatory loopholes
00:30by negotiating to buy general purpose semiconductors from Changshin memory instead of ordering custom
00:36ones. It seems that Apple has determined that using general purpose memory chips or negotiating
00:41prices does not violate US regulations. However, as Apple continues to push for the use of Changshin
00:47memory's chips, there has been considerable criticism within the United States. This is
00:51because Changshin memory is included on the blacklist designated by the US Department of
00:55Defense as a company linked to the Chinese People's Liberation Army. Being on this list
00:59doesn't mean that all transactions are immediately and automatically illegal, but it clearly indicates
01:03that the US government is closely monitoring the company from a national security perspective.
01:08US political circles are especially wary of Chinese semiconductor firms joining American supply
01:13chains. Multiple cases have revealed products with back doors, leading to widespread awareness
01:19that information is being stolen this way. Since Changshin memory is seen by the US as one of the
01:24companies linked to China's military capabilities and advanced technological development, concerns about
01:29Apple's actions are increasing. For Apple, it's a matter of considering the use of general purpose
01:33memory in products sold in China. But in US political circles, this is seen not just as a simple
01:38parts procurement issue, but as a problem of increasing dependence of American companies on the
01:42Chinese semiconductor industry. In fact, it is known that Apple is seeking approval from the US
01:46government and related agencies to proceed with transactions with Changshin memory. The fact that
01:51Apple is working to persuade major institutions and political circles in the US during this process
01:55is also fueling controversy. Especially since the US has strongly regulated Chinese tech companies
02:00like Huawei by linking them to national security issues, Apple's move to expand transactions with a
02:04Chinese semiconductor company that is already on the US government's watch list is unlikely to be
02:09accepted positively by the political circles. Among US lawmakers, there are concerns that if Apple
02:14starts using Chinese made semiconductors, it could give other American companies a justification to
02:19choose Chinese parts as well. The fact that Apple is a company with huge market influence is also
02:23making the issue bigger. If Apple accepts Changshin memory into its supply chain, it won't just end with
02:28one company's purchasing decision. It could also influence the decisions of global parts suppliers and
02:32other IT companies. That's why the US political circles are focusing on the possibility that Apple's
02:37choice could conflict with America's semiconductor policy toward China. So why is Apple pushing ahead with
02:42negotiations with Changshin memory so aggressively? The biggest reason is likely the memory supply
02:47shortage caused by the spread of AI. Currently in the global semiconductor market, competition among
02:52companies trying to build AI data centers is ongoing and as a result, the demand for memory is
02:57increasing significantly. As production of high performance memory and HBM for AI servers expands,
03:03semiconductor companies are concentrating production in this area. Even supply of general memory for
03:08smartphones and PCs is getting tight. Demand is rising quickly, but with new production facilities
03:13hard to expand immediately, memory prices are going up. For companies like Apple that need huge amounts
03:18of memory, this quickly becomes a major burden. Since Apple is not a company that produces memory itself,
03:23in order to secure the necessary supply stably, it must either adjust contract terms with existing
03:28suppliers or find new sources of supply. Here, Changshin memory has emerged as one of the options.
03:33However, there are different interpretations as to whether Apple really intends to make Changshin
03:37memory a core supplier. Rather than actually using Changshin memory's products in large quantities,
03:42Apple may be using the fact that it has secured a new supplier as leverage to gain an advantage in
03:46price negotiations with Samsung Electronics, SK Hynix, and Micron. With few memory suppliers,
03:52Apple has limited alternatives, even if it demands specific prices or contract terms. If Changshin memory
03:58appears to be a real supply chain option, Apple may gain more leverage in negotiations with current
04:04suppliers. However, at this point, things are not going according to Apple's calculations.
04:10Changshin memory has rejected Apple's prices and demands. In fact, for Changshin memory,
04:14there is already demand from major Chinese companies like Tencent and ByteDance. And as demand from
04:19overseas PC companies increases, Changshin memory has less reason to offer Apple a lower price.
04:24Apple tried to secure a new supplier to increase its bargaining power with existing companies.
04:28But since Changshin memory did not lower its prices, the limitations of this strategy have become
04:32apparent. Currently, it's no exaggeration to say that Apple is in a crisis. It is reported that
04:38Apple has reduced its hardware shipment targets this year due to the impact of the DRAM supply
04:42shortage. Similarly, as the memory semiconductor supply shortage worsens, there is a lack of memory
04:47chips. There are even rumors that the shipment targets for the iPhone 18 Pro series and Apple's
04:52first foldable smartphone, the iPhone Ultra, may be reduced. Changshin memory is not lowering its prices,
04:57but since Apple doesn't produce memory chips directly, there is a shortage. As a result,
05:01Apple is in a difficult situation. On top of this, the U.S. government has started to put direct
05:05pressure on Apple. It is reported that six U.S. senators have sent a letter to Apple demanding a
05:10promise not to use semiconductors from China's Changshin memory and Yangtze memory. What is
05:14especially noteworthy is that they didn't just express concern, but also set a specific deadline,
05:19asking Apple to clarify its position by August 21. This shows how seriously the U.S. government views the
05:25issue of Apple adopting Chinese-made semiconductors. Apple is now in a very difficult situation.
05:30If Apple meets the U.S. government's demands, its plans to use Changshin memory as a new supplier will
05:35inevitably face setbacks. On the other hand, if Apple continues discussions while keeping the
05:40possibility of using Chinese-made memory open, conflicts with the U.S. Congress could intensify.
05:44In particular, this issue is not just a corporate decision about which components Apple will use in
05:49its products, but is directly connected to the U.S. government's technology policy toward China.
05:53More importantly, both Changshin memory and Yangtze memory were mentioned together.
05:58U.S. policymakers are signaling that leading Chinese memory chip firms should be kept out
06:03of American companies' supply chains. If Apple agrees to this demand, other American companies
06:08may also be heavily influenced when considering Chinese-made memory in the future. On the other
06:12hand, if Apple does not comply with the policymakers' demands and continues to push for the adoption of
06:17Chinese semiconductors, it is also possible that the U.S. Congress may consider additional
06:20regulations or legislative measures. Now, Apple has to make a choice, whether to accept the
06:25demands of U.S. policymakers and halt the adoption of Chinese semiconductors, or to continue negotiations
06:30with Changshin memory for supply chain stability. With the August 21 deadline set, the controversy's
06:36direction could shift significantly based on Apple's stance. In fact, some say that the situation
06:42Apple is facing now is the result of its past supply chain strategies coming back to haunt
06:46them. For a long time, Apple has exercised strong purchasing power in negotiations with
06:50parts suppliers. Not only did they pressure suppliers to lower parts prices by placing large
06:54orders, but they also continuously demanded specific specifications and production schedules
06:59for the parts used in Apple products. For Apple, this was a strategy to maintain high
07:03profitability, but for their partners, it sometimes led to a huge investment burden.
07:07In industries like semiconductors, where new facilities need huge investments of time and
07:12money, major client demands strongly influence a company's investment choices.
07:16It has become a well-known story that several companies went bankrupt or were on the verge of
07:20bankruptcy after expanding their production facilities and investing in equipment to meet Apple's
07:24demand, only for Apple to later cancel additional extension contracts. But now, the memory market
07:29situation is changing. In the past, Apple was in a position to decide which of the various parts
07:34suppliers to contract with. But now, memory suppliers are in a situation where they have
07:38to decide where to prioritize the allocation of their production volume.
07:42AI data centers have rapidly increased demand for server memory, giving memory companies more
07:47reason to prioritize production for high-demand customers. Despite Apple's vast purchasing power,
07:53it's now less certain it can get the needed volume at the right time and price. This process is
07:58bringing renewed attention to complaints from semiconductor companies that have worked with Apple
08:02before. Some companies have criticized Apple in the past for aggressively lowering component
08:07prices. For example, recently, Micron, a memory semiconductor company, said that for over 10 years,
08:12Apple bought our chips for $5, put them in a metal box, and sold them to consumers as a $99
08:17upgrade.
08:18When we tried to raise the price to $7, they either refused or laughed at us. But now that we're
08:23charging $5 zero, Apple raised the consumer price to $250, criticizing Apple for this behavior.
08:29The important point here is whether Apple can continue to pressure suppliers in the same way
08:33as before. In the current memory market, suppliers can allocate limited quantities to multiple
08:37customers, and demand related to AI continues to increase. So there is no reason for companies to
08:42accept Apple's demands for lower prices. In fact, there have been reports that Apple's price and
08:46demands were not accepted even in negotiations with Changshin memory.
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