The tech giant Apple is currently dealing with a complicated political problem regarding the parts it wants to use inside its next generation of smartphones. The company hopes to buy memory chips from a supplier based in China to build devices that will be sold exclusively within that local market.
However, new reports show that getting the necessary government permission to pull off this supply chain move is turning out to be incredibly difficult.
US officials are making it hard to buy local parts
The company wants to keep its manufacturing costs as low as possible for its overseas market. To make that happen, the brand is attempting to source dynamic random-access memory from a local Chinese chip maker. Because of strict trade restrictions, the iPhone maker cannot just sign a contract. Instead, it is currently asking Washington for special permission to buy these restricted components. The firm claims that since these parts will only stay in phones sold to Chinese consumers, it will not cause any security risks.
However, American politicians are keeping a very close watch on technology deals involving Chinese companies. Lawmakers do not want to give any business advantages to foreign semiconductor factories. This strict position means the official request might face a total rejection. If government officials say no, the phone maker will have to scramble to find another way to get memory for its millions of devices.
Blocked chip deals could force smartphone prices to go up
If this deal gets blocked by regulators, the alternative plan will cost a fortune. Prices for mobile memory are already spiking across the global supply chain. For example, recent industry leaks reveal that the tech giant is facing much higher RAM expenses for its upcoming premium series. If it cannot use the cheaper Chinese suppliers, it will have to buy from alternative vendors in other regions who are charging top dollar right now.
This roadblock puts the hardware manufacturer in a really tough position. Spending so much extra cash on basic parts might force the brand to raise the retail price of the next iPhone when it hits shelves. Alternatively, the company might just have to take the losses and make less profit on every sale. Executives are running out of time to get an official answer before mass factory production begins this summer.
