Apple Inc is in talks to buy storage chips from Yangtze Memory Technologies, a move that would mark the iPhone maker's first buy from a Chinese memory chipmaker, the Nikkei reported on Wednesday.

The deal will be a big coup for Yangtze Memory and China if it goes through. For Yangtze Memory, a little known technology company, securing a deal with a global entity such as Apple will be a big deal even if the initial orders are small. For China, a deal with Apple will go some way toward its ambition to cut dependence on foreign chip supply, area in which Beijing has shown it is willing to invest heavily.

Whether Apple is under any pressure to buy from Chinese makers is unclear. Afterall, China has been known to apply pressure on foreign technology companies that want to operate within the country. One thing is for sure, Chinese deals will help Apple grow its business there, according to an industry executive.

For now, no Chinese company has yet to produce memory chips and Yangtze Memory's first factory lines, worth some $24 billion, in the city of Wuhan is set to start production only sometime in 2018.

As such, the earliest that the deal could come into fruition will be 2019 but industry sources say it is more likely to be after 2020 before Yangtze Memory can produce enough of the components at a standard that Apple requires. Apple will use these chips in new iPhone models and other products for sale in the Chinese domestic market specifically, according to two people familiar with the matter.

Apple now buys NAND flash memory chips for its iPhones from Toshiba of Japan, Western Digital of the U.S., SK Hynix and Samsung Electronics of South Korea." For more on this, read the full Nikkei Asian Review report here.

The fly in the ointment here is that Apple invested heavily in the bid for Toshiba's memory business in 2017 along with Bain, SK Hynix and others. At best Yangtze Memory would be a secondary supplier unless they've made Apple an offer they can't refuse. It was reported on in 2017 that Apple suppliers were slow with shipments for Apple's new iPhones.

The Yangtze Memory Technologies LinkedIn page talks about moving into 3D NAND memory chip business: "Yangtze Memory Technologies, Inc. (YMTI) was incorporated on Oct, 18, 2016 as a subsidiary of YMTC. YMTC/YMTI and are working on 3D NAND Flash memory development and will be competitive soon.

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