Apple NAND Chips

Apple is in talks with state-backed Yangtze Memory
Technologies to buy NAND flash chips from it, a move that
will mark the U.S. giant's first purchase from a Chinese memory
chipmaker and a huge boost to the local sector.

The deal will be a big coup for Yangtze Memory and China if it
goes through. For Yangtze Memory, a little known technology
company, securing a deal with a global entity such as Apple will
be a big deal even if the initial orders are small. For China, a
deal with Apple will go some way toward its ambition to cut
dependence on foreign chip supply, area in which Beijing has
shown it is willing to invest heavily.

Whether Apple is under any pressure to buy from Chinese
makers is unclear. Afterall, China has been known to apply
pressure on foreign technology companies that want to operate
within the country. One thing is for sure, Chinese deals will help
Apple grow its business there, according to an industry
executive.

For now, no Chinese company has yet to produce memory chips
and Yangtze Memory's first factory lines, worth some $24 billion,
in the city of Wuhan is set to start production only sometime in
2018.

As such, the earliest that the deal could come into fruition will
be 2019 but industry sources say it is more likely to be after
2020 before Yangtze Memory can produce enough of the
components at a standard that Apple requires. Apple will use
these chips in new iPhone models and other products for sale
in the Chinese domestic market specifically, according to two
people familiar with the matter.