Apple’s talks to buy blacklisted Chinese chips trigger global semiconductor selloff

Reports that Apple ↗ 1.45% is in negotiations to purchase memory chips from two Chinese semiconductor manufacturers on a Pentagon blacklist sent shockwaves through the semiconductor sector, triggering a broad selloff that erased hundreds of billions in market value and spread from Wall Street to Asian markets.

The Bloomberg Scoop

Bloomberg reported on July 1 that Apple is seeking to buy DRAM from ChangXin Memory Technologies (CXMT) and NAND flash from Yangtze Memory Technologies Co. (YMTC) for use in devices sold in China, corroborating earlier reporting by the Financial Times. CEO Tim Cook has appealed to Trump administration officials to help soften the political fallout from any deal, though Apple does not technically need U.S. permission since the Pentagon's Section 1260H blacklist restricts only Defense Department procurement, not private-sector purchases.youtube+4

The Philadelphia Semiconductor Index PHLX Semiconductor ↘ 5.03% fell 6.27% on July 1, setting the tone for a global rout. Micron Technology ↘ 7.02% dropped roughly 10%, while Applied Materials ↘ 3.92% fell sharply and AMD Advanced Micro Devices, Inc. ↘ 4.27% sank over 3.5%. The selloff extended into Asia on July 2, with South Korea's Kospi slumping 4.5%, Samsung Electronics and SK Hynix both falling more than 6%, and Japan's Kioxia tumbling 13%.swissinfo+3

Why It Matters for the Memory Market

The potential deal strikes at a sensitive moment. Micron just reported fiscal third-quarter revenue of $41.5 billion with gross margins near 85%, driven by insatiable AI-related memory demand. Apple, the world's largest buyer of mobile LPDDR5X memory, is battling what Cook has called a "100-year flood" in memory pricing — the same shortage that forced the company to raise hardware prices last month.finance.yahoo+2

Analysts warn that if Apple qualifies CXMT as a supplier, the move could undermine the pricing floor that has fueled memory stocks' extraordinary rally. Carter Worth flagged on CNBC's Fast Money that Micron has experienced four separate 20% drops since March and cautioned that normalized margins could compress sharply as new capacity enters the market.247wallst

CHIPS Act Implications

The rumored deal also raises questions about the $52 billion CHIPS Act, which was designed to keep advanced memory production onshore. Micron's subsidized fab in Clay, New York will not be operational until 2030. Once a customer of Apple's scale qualifies a Chinese supplier, analysts argue that unwinding the relationship during any future entity-list expansion would take years — effectively locking in a dependency the legislation was meant to prevent.tftc+1

No deal has been finalized, and discussions remain ongoing.bloomberg