US Republican lawmakers have warned Apple that it will face intense congressional scrutiny if the California company acquires memory chips from a controversial Chinese semiconductor maker for the new iPhone 14.
Republicans Marco Rubio, vice chairman of the Senate Intelligence Committee, and Michael McCaul, chairman of the House Foreign Relations Committee, said they were alarmed after a media report said Apple will add Yangtze Memory Technologies Co (YMTC) to its list of suppliers of Nand flash memory chips, which are used to store data in smartphones.
“Apple is playing with fire,” Rubio told the Financial Times. “She knows the security risks posed by YMTC. If she goes ahead, she will be subject to unprecedented scrutiny by the federal government. We cannot allow Chinese companies linked to the Communist Party to enter our telecommunications networks and millions of Americans’ iPhones.” .
Asked about Congressional concerns, Apple told the FT that it does not use YMTC chips in any products, but is “considering outsourcing to YMTC for Nand chips to be used in some iPhones sold in China.”
Apple said it is not considering using YMTC chips in phones marketed outside of China. The company added that all user data stored on the Nand chips used by it was “fully encrypted.”
The FT reported in April that the White House and the Commerce Department were investigating allegations that YMTC was violating US export control rules by supplying chips to Huawei, a Chinese telecommunications equipment group.
“YMTC has extensive ties to the Chinese Communist Party and the military. There is credible evidence that YMTC is violating export control laws by selling goods to Huawei,” McCaul told the FT. “Apple will effectively transfer knowledge and know-how to YMTC, which will increase its capabilities and help the CCP achieve its national goals.”
Chuck Schumer, Senate Majority Leader, also raised concerns in particular with Secretary of Commerce Gina Raimondo about the YMTC, according to one source.
YMTC did not respond to a request for comment about its relationship with Apple.
In July, a bipartisan group of senators — including Schumer and Democrat Mark Warner, chairman of the Senate Intelligence Committee — urged the Biden administration to put YMTC on a Commerce Department debarment that would effectively bar American companies from providing technology to the United States. Chinese group.
Senators, including James Risch, the Republican leader of the Foreign Affairs committee, said that YMTC should be placed on the “entity list” as it was violating export control rules by selling memory chips to Huawei.
Lawmakers also accuse Beijing of subsidizing YMTC in ways that would help put the “national champion” on the path to dominating the sector by selling chips below cost, as China has done in other areas such as the solar industry.
“YMTC is an immediate threat,” they wrote to Raimondo.
A person familiar with the Commerce Department’s position said the agency is aware of the concerns and is preparing a response to senators.
Fear that YMTC could ‘undermine the market’
A spokesperson said the department’s Office of Industry and Security was conducting a review of China-related policies that “potentially would seek to employ a variety of legal, regulatory and, where relevant, law enforcement tools to keep advanced technologies out of the wrong hands.”
McCaul, who is expected to become head of the foreign affairs committee if Republicans win control of the House of Representatives in November’s elections, said Chinese subsidies to the YMTC pose a threat.
“The CCP’s massive subsidies to YMTC mean the company will undermine the market. This could likely devastate the memory chip market and give China even more control over this critical national security technology,” he said. “How can the world’s data be safe if stored on a chip made by a CCP ‘national champion’?”
Several people familiar with the situation said lawmakers have asked Apple in recent months about YMTC-related speculation, but have received no response. Apple did not comment on the congressional investigations.
The criticism of Apple comes as the Biden administration intensifies efforts to make it harder for China to access cutting-edge technology. US officials recently told Nvidia and Advanced Micro Devices – two US chipmakers – that they would have to obtain special licenses to sell advanced processors used in artificial intelligence applications to Chinese companies.
Congress passed legislation in July that would provide US semiconductor makers with a $52 billion fund to support the development of the domestic chip industry and reduce dependence on foreign companies.
Underscoring YMTC’s importance to China, President Xi Jinping visited the company in 2018 after Washington imposed tough restrictions on Huawei and ZTE, another Chinese telecoms equipment maker.
“It is very shocking that Apple is partnering with a Chinese tech company … that is in the exact same industry as the other banned companies and has the direct support of the CCP leadership,” said Zach Edwards, an independent expert on technology.
Eleanor Olcott collaborated in Hong Kong. Translated by Luiz Roberto M. Gonçalves
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