Republican lawmakers have warned Apple that it will be heavily scrutinized by Congress if the California company buys memory chips from a controversial Chinese semiconductor manufacturer for the new iPhone 14.
Marco Rubio, Republican Vice Chairman of the Senate Intelligence Committee, and Michael McCaul, the top Republican on the House Foreign Affairs Committee, said they were alarmed after a message in the media that Apple would add Yangtze Memory Technologies Co to its list of suppliers of Nand flash memory chips used to store data on smartphones.
“Apple is playing with fire,” Rubio told the Financial Times. “It knows the security risks of YMTC. If it moves forward, it will be under investigation like it has never seen from the federal government. We cannot allow Chinese companies tied to the Communist Party access to our telecommunications networks and millions of Americans’ iPhones.”
Asked about congressional concerns, Apple told the FT it did not use YMTC chips in products, but said it was “evaluating YMTC’s procurement of Nand chips for use in some iPhones sold in China”.
Apple said it is not considering using YMTC chips in phones sold outside of China. It added that all user data stored on Nand chips used by the company 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, the Chinese telecom 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 enhance its capabilities and help the CCP achieve its national goals.”
Democratic Senate Majority Leader Chuck Schumer also privately voiced concerns to Commerce Secretary Gina Raimondo about YMTC, according to a person familiar with the situation.
YMTC did not respond to a request for comment about its relationship with Apple.
In July, a bipartisan group of senators — including Schumer and Mark Warner, the Democratic chairman of the Senate Intelligence Committee — urged the Biden administration to put YMTC on a trade department blacklist that would effectively ban U.S. companies from technology. to the Chinese group.
The senators, including James Risch, the top Republican on the foreign relations committee, said YMTC should be placed on the “entity list” for violating export control rules by selling memory chips to Huawei.
The lawmakers also accused Beijing of subsidizing YMTC in a way that would help put the “national champion” on track to dominate the sector by selling chips below cost, as China has done in other areas, such as the solar energy industry.
“YMTC is an immediate threat,” they wrote to Raimondo.
A person familiar with the trade department’s stance said he was aware of the concerns and was preparing a response to the senators.
A spokesperson said the department’s Bureau of Industry and Security was conducting a review of China-related policies that “may seek to deploy a variety of legal, regulatory and, where relevant, enforcement tools to extract advanced technologies from the wrong to hold hands”.
McCaul, who is poised to become head of the House Foreign Affairs Committee if Republicans gain control of the House of Representatives in November’s midterm elections, said China’s subsidies to YMTC posed a threat.
“Massive CCP subsidies to YMTC mean the company will undermine the market. This could very 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 it’s stored on a chip made by a national CCP champion?”
Several people familiar with the situation said lawmakers had asked Apple about YMTC-related speculation in recent months, but received no response. Apple did not comment on congressional questions.
Apple has been criticized as the Biden administration is stepping up its efforts to make it harder for China to secure advanced technology. US officials recently told Nvidia and Advanced Micro Devices – two US chipmakers – that they would need to obtain special licenses to sell advanced processors used for artificial intelligence applications to Chinese companies.
Congress passed legislation in July that would provide US semiconductor manufacturers with a $52 billion pool to support the development of the domestic chip industry and reduce reliance on foreign companies.
Underlining the importance of YMTC to China, President Xi Jinping visited the company in 2018 after Washington imposed severe restrictions on Huawei and ZTE, another Chinese telecom equipment manufacturer.
“It’s pretty shocking that Apple is partnering with a Chinese tech company. . . which is in exactly the same industry as the other banned companies and has the direct backing of top CCP leadership,” said Zach Edwards, an independent tech expert.
Additional reporting by Eleanor Olcott in Hong Kong
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