Apple Seeks U.S. Approval to Purchase Chips From Blacklisted Chinese Company

Apple wants to be allowed by the US government to source its components from a Chinese supplier currently on a list of sanctioned entities, reported. The move speaks to the predicament many global tech companies are increasingly finding themselves in as geopolitical challenges redraw the semiconductor supply chain and the framework of export controls. The Chinese supplier’s business with the US, like other firms currently in its position, is largely prevented unless a company obtains a special export license.

Apple is apparently petitioning for that waiver so it can continue obtaining chips from the company that go into a host of Apple devices.

This is just the reality of semiconductor business these days - products are highly specialized, and tech giant supply chains, while diversified, cannot just immediately stop working with a specific manufacturer they might be reliant on for certain technologies. The US government has ramped up curbs against many Chinese tech businesses on national security grounds over the last several years. Companies that land on the so-called Entity List and other restricted trade categories must have export licenses before they can receive anything or be engaged in most any other transaction with their US counterparts. Apple has not secured permission yet and no guarantee of it.

These sorts of petitions are vetted on an individual basis by US regulators, weighing national security concerns versus commercial interests.

Their reviews consider the kind of products being sold, how and why the purchase might be used, and possible geopolitical ramifications. Getting the green light would help Apple ease supply chain continuity woes. The tech giant has tried for years to diversify away from reliance on the manufacturing and production hubs in the US, expanding into locations including India and Vietnam, but many of the chips it uses still must be produced by manufacturers in China.

It speaks to a larger difficulty for global technology businesses that have to navigate competing - and sometimes intersecting - sets of regulations, export control rules, industrial policies, and security requirements imposed by governments around world aiming to lock down access to key technologies while not hindering competition. Supply chain for semiconductor devices has become the focus of intense global jockeying. Governments are investing hundreds of billions of dollars in boosting their own domestic chip industries and have imposed strict controls on leading edge technologies viewed as a threat from their global competitors that are deemed a national security risk for artificial intelligence or military development.

While companies have sought to diversify their supply chain strategies, severing them completely is still an monumental task that will likely take years to unfold - and massive investment, according to industry experts.

Any savvy investor knows that regulatory action can be a key factor when evaluating tech stocks and other shares; it's no longer just about a company's balance sheet. The impact of whether Apple gets what it's asking for remains to be seen but it reveals how intertwined the supply chains of global technology companies, national security objectives and export controls have all become.