In June 2026, Tim Cook stated that rising costs in the memory industry were beginning to be reflected in consumer prices. While Apple had previously tried to absorb the sharp increase in costs, that approach was no longer sustainable. As this memory supply shortage persisted, Apple began considering the use of chips from China’s memory manufacturer ChangXin Memory Technologies (CXMT). CXMT is currently the world’s fourth-largest dynamic random access memory (DRAM) producer, whose main competitors are Samsung Electronics, SK Hynix and Micron Technology. However, CXMT is included on the US Department of Defense’s Section 1260H list, which identifies companies with alleged ties to the Chinese military. It does not actively prohibit US companies from buying from a listed firm, with its principal legal effect falling on Defense Department procurement. For Apple, this makes an otherwise lawful purchase politically fraught. While memory shortages make Chinese suppliers a commercially viable, or even preferred, marginal option, companies face growing political scrutiny over procurement decisions that remain legally permissible.
Former Commerce Department official Kevin Kurland noted that the US has not added any new companies to the Commerce Department’s Entity List since October 2025, suggesting that trade policy is taking precedence over a key national security tool. However, the dilemma US companies are facing, including Apple, is equally real. The freeze on additions to the Entity List reflects administrative discretion rather than any formal commitment, and it can be reversed at any time. While sourcing chips from CXMT is not technically illegal, nor does it necessarily require formal US government approval, that does not necessarily mean major US companies are free to make large-scale procurement commitments. They are facing a set of political costs that are far harder to quantify: congressional scrutiny, reputational risk, future policy shifts and the possibility that procurement decisions could later come under renewed scrutiny if the broader US-China negotiating climate shifts. According to reports, Apple’s discussions are currently limited to devices sold in the Chinese market, and no agreement has been reached.
The practical effect of this prolonged uncertainty is likely to push Western hardware makers toward a more politically acceptable but also more concentrated pool of non-Chinese suppliers. Some commentators argue that Washington has effectively made Western hardware manufacturers dependent on Samsung, SK Hynix and Micron. Two are South Korean companies, and one is American. Together, they form the trusted supplier base preferred by Washington. But this is not an ideally unlimited, diversified, or low-cost alternative supply pool.
The concentration of that base is now drawing legal scrutiny over whether it has been used to restrict supply. A lawsuit filed on June 25, Garciaguirre v. Samsung Electronics, names Samsung, SK Hynix and Micron as defendants. The three companies account for roughly 90 percent of global DRAM market revenue. The plaintiffs, 17 individuals and small custom PC builders, brought claims under Section 1 of the Sherman Act and multiple state antitrust statutes. The plaintiffs allege that the three coordinated to restrict the global supply of conventional DRAM, driving commodity prices up by approximately 700 percent over four years. Although the allegations remain unproven and the defendants have yet to respond, the case complicates the narrative of a ‘trusted supplier’ base. Micron, the only US company among the three defendants, has consistently lobbied lawmakers to tighten restrictions, calling for a harder line against its Chinese competitors.. Micron has a direct commercial stake in this issue, as its principal competitors in China are CXMT and Yangtze Memory Technologies Co. (YMTC, the other leading Chinese NAND flash memory producer). Some commentators argue that the result is to use US national security policy to protect the pricing power of existing oligopolies, with consumers ultimately bearing the cost. While US policy is simultaneously pursuing national security and trade negotiation, these goals are not always compatible when it comes to memory supply.
If Washington’s strategy is to make the memory industry more secure, its results seem to be underwhelming. It is too permissive to satisfy national security advocates, who see trade considerations taking precedence, and too restrictive to let companies act on commercial logic. As Chinese suppliers are kept at arm’s length by political labeling, and the threat of Entity List restrictions stops short of becoming a formal prohibition, US policy has not resolved the underlying supply problem. Instead, it has confined companies to a narrower pool of politically acceptable suppliers. The boundaries of that pool are not defined by legal rules alone. They are instead continually reshaped by the tension between commercial incentives and political calculations. AI-driven memory shortages have made Chinese suppliers commercially attractive once again. At the same time, the Section 1260H list, the prospect of Entity List restrictions and congressional pressure have made it difficult to normalize their role politically.
Regardless of whether Apple ultimately reaches a deal, the episode has exposed the inherent tensions within the US regulatory framework. For now, those constraints remain real and consequential. House Foreign Affairs Committee Chairman Brian Mast and House Select Committee on China Chairman John Moolenaar have both publicly opposed the move. Some officials within the Trump administration have also expressed opposition in internal deliberations. On July 16, lawmakers called on the Commerce Department to block the proposed procurement by Apple. Apple abandoned a similar effort to source chips from YMTC in 2022, following a congressional backlash. If the talks result in a deal, they will carve out a market- and product-specific exception to the current containment strategy, setting a precedent for others to seek similar treatment. If they fail, the outcome will amount to more than a single failed procurement. It would demonstrate that a transaction not prohibited by law can nevertheless be blocked by political pressure, even in the absence of a formal ban. The former outcome would undermine the coherence of the containment strategy; the latter would further entrench reliance on Samsung, SK Hynix and Micron. If similar supply pressures emerge elsewhere in the AI-strained stack, such as substrates and packaging, the same dilemma may recur.
Further readings
Mueller (2026) Thank the China Hawks for Higher Prices of Digital Devices
Reuters (2026) US holds off blacklisting China’s DeepSeek, more than 100 firms deemed security risks
Lee (2026) Apple begins testing CXMT chips for devices sold in China, FT says
eeNews Europe (2026) MATCH Act targets chip tool exports to China