Read How Apple Plans To Beat Chip Crisis and Continue To Score In China

Apple Inc AAPL is exploring new sources of the memory chips that go into iPhones, including its first Chinese producer of the critical component, Bloomberg reports.

In February, Apple's crucial partner Kioxia Holdings Corp halted production at two plants due to material contamination, further jeopardizing the ongoing semiconductor crisis. Bloomberg notes that the halt could push flash memory chip prices up 5% to 10% in the June quarter.

Apple considered expanding a roster of suppliers that already included Micron Technology Inc MU and Samsung Electronics Co Ltd SSNLF. 

Apple tested NAND flash memory chips sample made by Tsinghua Unigroup Co's Yangtze Memory Technologies Co and discussed a possible tie-up. Yangtze Memory could serve as Apple's good backup choice after the leading flash memory makers Samsung and SK Hynix Inc (HXSCL), as per Bloomberg.

Apple could use Yangtze Memory's product in lower-end devices like the iPhone SE.

Yangtze Memory could offer an attractive source of cheaper chips close to Apple's critical assemblers like Hon Hai Precision Industry Co Ltd HNHPF or Foxconn and Pegatron Corp PGTRF.

Bloomberg writes that an analyst stated that Yangtze memory could supply about 5% of memory for iPhone SE and 3% to 5% of memory for the upcoming iPhone 14.

Yangtze Memory could help Apple score points with China government, known for the leading smartphone market. Apple has managed to strike a delicate balance in China, helping it score in a country that banned rivals from Alphabet Inc's GOOG GOOGL Google to Facebook rebranded Meta Platforms Inc FB.

Price Action: AAPL shares traded higher by 0.44% at $178.55 in the premarket on the last check Thursday.