Apple’s China Memory Gamble Fails, But Its Services Empire Still Shields It From Samsung’s Pain

In a bid to sidestep soaring memory chip costs driven by AI demand, Apple tried to source DRAM from China’s state-backed CXMT. The move, which involved lobbying the U.S. government for a waiver, was seen as a potential game-changer for consumer electronics pricing. But it backfired: CXMT is charging even higher prices than Samsung, leaving Apple’s customers facing the same market realities as Samsung’s.

Why Apple Sought CXMT Memory

Samsung’s semiconductor division is minting money thanks to AI-driven demand for memory chips. That has made it tough for consumer electronics makers to find affordable supply without hiking end-user prices. Samsung’s own mobile division is losing money as a result, even though it belongs to the same conglomerate profiting from the shortage. Price hikes for the Galaxy S27 series are already rumored.

Apple tried a different route. It signaled willingness to source memory from CXMT, a Chinese firm kept out of the global supply chain by U.S. restrictions. The logic: CXMT might offer commodity DRAM at lower prices than the big three — SK Hynix, Samsung, and Micron. Some analysts saw it as a negotiating tactic, a credible threat to introduce a fourth supplier and soften pricing.

The Tactic Failed

Reports indicate CXMT is willing to supply Apple, but at prices exceeding Samsung’s. CXMT isn’t sitting on idle capacity; Chinese giants like Huawei, Xiaomi, OPPO, VIVO, Tencent, Alibaba, and ByteDance have locked in its production through high-priced, long-term contracts for their own AI infrastructure needs. Since they can’t easily tap global memory supply chains, CXMT is their only reliable alternative.

This lays bare an uncomfortable reality: the CXMT approach was the most significant test of whether any alternative supply could provide pricing relief. When a supplier under U.S. pressure declines to budge on pricing for hundreds of millions of Apple devices, it signals a complete shift in DRAM market power. CXMT’s price floor is now essentially Samsung’s. Everyone, including Apple, must match or exceed it to secure supply.

Apple’s Services Business as a Shield

Any hope Apple had of undercutting Samsung on price — or at least avoiding raising consumer prices — is now lost. Apple customers must face the same market realities as Samsung buyers. The key question: will Apple use its services juggernaut (App Store, Apple Music, iCloud, Apple TV+) to subsidize hardware pricing decisions that Samsung simply cannot make?

For Apple, holding iPhone prices flat while memory costs rise is a margin management decision. Samsung’s mobile division has no other option but to take a loss, because no other part of its business generates cash like Apple’s services. Apple’s balance sheet might buy its customers time before they bear the full brunt of market dynamics. For Samsung’s customers, that time has already run out.

What This Means for Consumers

The DRAM market’s power structure has shifted decisively. With no cheap alternative in sight, device prices are unlikely to return to pre-shortage levels. Apple’s services revenue offers a temporary buffer, but Samsung’s mobile division — and its customers — will feel the pain sooner. The era of cheap memory is over, and both Apple and Samsung fans will have to pay up.

Frequently Asked Questions

Why did Apple try to source memory from China’s CXMT?

Apple sought a waiver from the U.S. government to buy DRAM from CXMT, hoping to bypass high prices charged by Samsung, SK Hynix, and Micron. The move was partly a negotiating tactic to pressure the big three.

Did Apple’s CXMT strategy work?

No. CXMT is charging even higher prices than Samsung, thanks to locked-in contracts with Chinese tech giants. Apple’s gamble failed to provide pricing relief.

How does Apple’s services business help it manage memory costs?

Apple’s services division (App Store, iCloud, Apple TV+) generates massive profits that can subsidize hardware pricing. This allows Apple to hold iPhone prices flat longer than Samsung, whose mobile division lacks such a cash cow.

What does this mean for future smartphone prices?

Device prices are unlikely to drop. Both Apple and Samsung customers will face higher costs as DRAM supply remains tight and expensive. Apple may delay the pain, but it’s coming for everyone.