Original author: Zhao Ying

Original source: Wall Street Insight

Apple's efforts to procure products from Changxin Memory are reshaping the market's positioning of this DRAM manufacturer. Citigroup believes that, regardless of whether it ultimately obtains approval from the U.S. government, Apple's actions are already a strong endorsement of Changxin Memory's technological strength.

According to the Wind Trading Desk, citing a report from the Financial Times on June 27, six informed sources revealed that Apple is lobbying the U.S. government for permission to purchase memory chips from Changxin Memory to alleviate the cost pressure caused by the surging memory prices. Citigroup noted in a subsequent research report that Apple's move redefines Changxin Memory's market image from "Chinese domestic alternative" to "a reliable fourth largest DRAM manufacturer globally."

This news poses a positive signal for Changxin Memory and its supply chain. Citigroup believes that the packaging and testing sector, as well as equipment firms, will benefit from the increased demand for equipment and packaging/tests due to Changxin Memory's capacity expansion. At the same time, well-known Apple supply chain analyst Ming-Chi Kuo pointed out that the real driving force behind Apple's lobbying of the White House is not merely the desire to cut costs, but rather a deeper structural pressure stemming from the ongoing expansion of the global memory supply gap projected to persist until 2027.

Apple seeks policy endorsement; technical barriers are no longer an obstacle

The core judgment in Citigroup's research report is: Apple's willingness to consider Changxin Memory as a potential supplier is, in itself, a form of market validation.

Changxin Memory's LPDDR5X products (12Gb/16Gb chips) have reached a transmission rate of 10667Mbps and possess the technical capability to cover high-end mobile phones, tablets, and laptops. This means that the specifications of Changxin Memory's products can meet Apple's stringent requirements for memory performance, and the technical barriers have essentially been removed.

Citigroup pointed out that the 1260H list does not prohibit U.S. companies from procuring from Changxin Memory, but Apple's proactive push for policy endorsement is out of precaution against potentially stricter restrictions in the future—such as a potential expansion of the Bureau of Industry and Security (BIS) entity list. Given the current U.S. political environment, the difficulty of obtaining approval should not be underestimated, but the fact that Apple is willing to bear this political cost itself clearly indicates its recognition of the reliability of Changxin Memory's products, as well as the severity of the current memory shortage situation.

Supply gap is a deeper driving force

Ming-Chi Kuo has offered an interpretation of Apple's actions that goes beyond simple cost logic. He explicitly stated that the pressure Apple faces has evolved from "soaring memory prices" to "expanding supply gaps," which are fundamentally different in nature, with the latter being more difficult to resolve through price increases or supplier changes.

According to his latest industry research, it is expected that 15% to 20% of the memory capacity allocated to consumer electronics in 2026 will shift to data centers by 2027, and this proportion may further increase. The ongoing construction of AI infrastructure continues to absorb high-end memory capacity, and the supply share available to consumer electronics is systematically narrowing.

This trend has already begun to affect Apple's product cadence. Kuo noted that due to the tight supply of LPDDR memory, the actual shipment volume of Apple’s A20 chip in the second half of 2026 to the first quarter of 2027 may be 10% to 20% lower than originally targeted, although part of this may also reflect Apple's own overbooking.

Supply chain may benefit

Citigroup believes that the market repricing brought about by Changxin Memory gaining Apple's endorsement will translate up the supply chain to upstream equipment manufacturers and packaging/testing companies. In the packaging and testing sector, Citigroup has recently raised the target prices for three domestic packaging and testing companies to reflect the overall valuation reassessment in the sector.

Whether Changxin Memory can ultimately secure Apple's procurement orders still depends on the trajectory of U.S. government policies. However, this "vote of confidence" itself is already sufficient to change the market's narrative framework regarding Changxin Memory.

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