The latest research report from Korea Investment Securities (KIS) points out that under the current global shortage of memory chips, it is difficult for Chinese memory manufacturer Changxin to have a decisive impact on the international market. This shortage is mainly driven by the high demand for artificial intelligence chips, coupled with the fact that consumer electronics giant Apple has recently raised the prices of many products, citing "insufficient memory supply" as the reason, making the market pay close attention to its subsequent supply strategy. Multiple media reports said that Apple is applying for an exemption from the U.S. government, hoping to be allowed to purchase DRAM chips from Changxin, a Chinese company that is included in the "entity list."
Public information shows that Changxin has frequently appeared in industry reports in recent months. In June, the Korean media "Seoul Economic Daily" cited news that Changxin has reached roughly the same level as Korean manufacturers in HBM3 high-bandwidth storage technology, and HBM3 is being used in artificial intelligence GPU products two generations ago such as Nvidia H100. At the same time, reports indicate that Google is also evaluating Changxin's memory chip solutions, triggering speculation about the Chinese storage company's international prospects. Against the backdrop of Apple's price hikes and higher memory prices, there is further news in the market that Apple intends to purchase from Changxin to ease its own memory supply pressure.
However, from a compliance perspective, Changxin’s position is quite sensitive. According to reports, the company was identified by the Pentagon as a "Chinese military-affiliated enterprise" during the term of former U.S. President Biden, and has been approved by the U.S. Department of Commerce to be included in the "Entity List." This means that even if Apple wants to cooperate with it, it still needs the U.S. government to make special exemptions or adjustments in export controls. The procedures are complicated and uncertain. Recent Reuters reports have also been widely cited by Korean institutions and industry analysts, becoming one of the key references in discussing potential cooperation between Apple and Changxin.
In terms of production capacity and priority allocation, KIS believes that even if the US government finally approves Apple's purchase from Changxin, the actual implementation will still be very difficult. Analysis points out that China's domestic storage production capacity is shifting from LPDDR chips commonly used in mobile terminals to DDR memory products that are more in line with domestic market needs to meet the expansion of local servers, Internet and smart terminals. This structural adjustment has resulted in a tight supply of DRAM in China, which has significantly affected the production plans of local smartphone companies.
In this context, the Chinese government and local customers are believed to give priority to protecting the supply rights and interests of domestic manufacturers. The KIS research report mentioned that as Chinese Internet and terminal companies sign long-term supply agreements (LTA) with Changxin, limited DRAM production capacity is more likely to be locked in Chinese customers such as Tencent, Alibaba Cloud, ByteDance, Xiaomi, etc., rather than being "exported" to overseas companies such as Apple. Previously, it was reported that Changxin had signed a long-term supply agreement with Tencent totaling approximately US$3 billion and was negotiating similar cooperation with other Chinese Internet companies, which further reduced the supply space for the international market.
In terms of global market impact, KIS judged that it is difficult for Changxin to effectively alleviate the tension in the international storage market at this stage. On the one hand, Changxin’s yield rate on new generation products such as DDR5 has not yet fully caught up with international first-tier manufacturers, and it will still take time to improve production capacity and yield rate. On the other hand, given the strong local demand in China and the policy tendency to ensure domestic supply, even if Changxin has a certain degree of technical competitiveness, its remaining production capacity for export is still very limited. This means that even if Apple successfully obtains a compliance exemption, the actual number of chips it can obtain from Changxin may not have a substantial easing effect on global memory prices and supply and demand structures.
At the same time, analysts believe that the reason why Apple is actively exploring alternative supply sources such as Changxin reflects its continued rise in memory demand in artificial intelligence and high-end terminal products. As AI computing power becomes the core selling point of various devices, the importance of HBM and high-performance DRAM has become increasingly prominent. Apple's memory planning on the new generation of iPhones, Macs and self-developed chip platforms has also attracted great attention from the industry. With the production capacity of traditional suppliers being seized by AI servers, Apple is trying to lock in long-term storage resources through a diversified supply strategy. However, under the dual constraints of geopolitics and export controls, its path has become increasingly complicated.
From a broader industry perspective, once the potential cooperation between Changxin and Apple is stranded, it may once again highlight the "domestic demand first" characteristic of China's storage industry. As domestic cloud computing, Internet service and smart terminal manufacturers are increasing their focus on AI and high-performance computing power, the shortage of key components such as DRAM and HBM is forcing local companies to prioritize domestic production capacity through long-term agreements and policy coordination. This not only accelerates the scale expansion of Chinese storage manufacturers, but also objectively weakens their ability to participate in international market competition in the short term and provide "incremental production capacity" for global buyers.
Based on information from all parties, industry organizations generally believe that it is difficult for Changxin to become a "firefighter" for Apple and even the global market in the short term. In the new round of storage cycles driven by AI, global technology companies including Apple must continue to compete and balance among suppliers in South Korea, the United States, China and other places within the compliance framework to cope with the continued tight supply environment of memory chips.