iPhone with Chinese Chips
Apple is in negotiations with Chinese semiconductor maker Yangtze River Storage Technology to buy NAND flash memories, the Chinese media said on February 18. If the bilateral negotiations lead to a final agreement, Chinese semiconductor products will be loaded into the Apple iPhone for the first time, which is expected to be a big turning point for China's promotion of its semiconductor industry.
According to the Chinese media, Apple is negotiating a deal to buy NAND flash memories from Yangtze River Storage Technology, a subsidiary of China's largest semiconductor manufacturer Tsinghua Unigroup. Currently, Yangtze River Storage Technology is constructing a plant worth US$ 24 billion in Wuhan, China so industry experts expect that the company will be able to mass-produce NAND flash memories starting at this year end.
Although Apple's initial order will be small even if they strike a deal, the market is paying a lot of attention to the fact that a Chinese semiconductor company will supply semiconductors to Apple for the first time. If a bilateral agreement is reached between the two, Yangtze River Storage Technology will be able to supply products beginning next year, but actual adoption by Apple is highly likely to take place one or two years later as Apple is likely to demand strict quality standards on the first delivery from the Chinese semiconductor maker. The Chinese media are predicting that NAND flashes supplied by Yangtze River Storage Technology will go into the iPhone to be sold in the Chinese market.
Apple, which accounts for 15% of global NAND flash demand, is currently buying semiconductors from Samsung Electronics, SK Hynix, Toshiba and Western Digital among others.
Earlier, China's Xinhua News Agency reported that the Chongqing City government, the Tsinghua Unigroup and Sino IC Capital agreed to raise 100 billion yuan in capital to build an investment company for semiconductor-related integrated circuit (IC) companies. Tsinghua Unigroup, a leader in Chinese semiconductors, secured semiconductor design technology by acquiring RDA Microelectronics for US$ 900 million in 2014 and is upgrading its technology by taking over semiconductor design companies and manufacturers in Taiwan among others.