Apple China sourcing speculation hits semiconductor shares
2026-07-03
Shares in semiconductor-related companies fell across global markets on the 2nd after speculation that Apple may source memory chips from two Chinese firms. In Japan, South Korea and then the US market, stocks slipped on views that the advantage of existing suppliers could be eroding.
Speculation over expanded sourcing
Bloomberg reported on the 1st that Apple is considering sourcing from Chinese memory makers ChangXin Memory Technologies (CXMT) and Yangtze Memory Technologies (YMTC). CXMT makes DRAM, while YMTC produces NAND flash memory.
In response to the report, shares in US DRAM giant Micron Technology fell 5% from the previous day, while US NAND maker SanDisk sank as much as 14%. The Nasdaq Composite Index, which has a high weighting of technology stocks, also fell 1%.
In South Korea, SK Hynix shares plunged 15% and Samsung Electronics fell 9%, pushing the Korea Composite Stock Price Index (KOSPI) down 8% to its lowest level in about a month. In Japan, shares of NAND maker Kioxia Holdings fell 13%, and the Nikkei average dropped 2% as weakness in artificial intelligence (AI) and semiconductor-related shares weighed on the market.
Pricing leverage
The two Chinese firms Apple is said to be considering are designated by the US Department of Defense as companies of security concern. If any deal proceeds, it is likely to draw a response from the US government, but the Financial Times reported in late June that Apple had been lobbying the US government to source from CXMT. Apple declined to comment.
DRAM and NAND are essential components in products such as the iPhone, and Apple is believed to mainly source them from companies such as Micron. Supply and demand have tightened as major US tech companies expand investment in AI data centers, sending prices sharply higher.
Apple is seen as aiming to weaken the bargaining power of existing suppliers and force lower prices by expanding sourcing in China. Micron’s gross margin in its mobile-device business for the March-May 2026 quarter rose to 87%, up 63 percentage points from 24% a year earlier, underscoring Apple’s challenge in keeping procurement costs down.
A market-moving catalyst
On June 25, Apple raised prices globally for products including its Mac computers and iPad tablets against a backdrop of soaring memory prices, while also lifting the starting price in Japan by 20% to 30%. The company said that component prices had never risen so sharply over such a short period.
Semiconductors are now at the center of market moves. The Magnificent Seven, the seven major US tech companies, have seen their combined market capitalization remain almost flat since the start of the year amid concerns over returns on huge investments. Money has instead shifted to memory-related names and CPU-related companies such as US Intel and US Advanced Micro Devices (AMD).
Global markets continue to be shaken whenever semiconductor-related news emerges. After US Broadcom's earnings release in early June, related shares fell as AI revenue missed market expectations, while shares turned higher after Micron's earnings in late June.
On the 1st, reports emerged that US Meta plans to start a cloud business that would lease out AI computing resources to external customers, prompting semiconductor shares to sell off on fears of an oversupply of AI computing capacity. Market moves driven by speculation appear likely to continue for the time being.
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