The author is a Reuters Breakingviews columnist. The opinions expressed are her own.

By Robyn Mak

HONG KONG, July 15 (Reuters Breakingviews) - China's most important chipmakers may be its most boring ones. Case in point is state-backed Changxin Memory Technologies, which makes low-tech data-storage semiconductors. A global supply crunch has forced even $4.6 trillion Apple AAPL.O to turn to CXMT for supplies, supporting the Chinese firm's move on Tuesday to double its Shanghai IPO fundraising target to $8.6 billion. It signals a rethink of the strategic value of low-margin chips.

For years, Western policymakers and manufacturers have prioritised advanced silicon as cutting-edge processors from Nvidia NVDA.O and high-bandwidth memory from Samsung Electronics 005930.KS and its rivals emerged as critical AI assets. Lower expected returns from building new factories dedicated to churning out mature chips turned off investors as well.

The resulting chronic underinvestment is now squeezing everyone from consumer electronics firms to automakers. This issue is most severe in dynamic random access memory, or DRAM, where surging costs and shortages are squeezing handset makers from China's Xiaomi 1810.HK to Apple.

To cope, the U.S. company has raised iPad and MacBook prices and is in talks with CXMT to secure supplies for devices sold in the People's Republic, the Financial Times reported this month, citing sources. Tim Cook, per a Bloomberg report, had to personally appeal to White House officials given that the chipmaker has been blacklisted by the Pentagon, which alleges CXMT has ties to the Chinese military.

Despite lagging its rivals technologically by as much as three years, CXMT is emerging as a strong global alternative to Samsung, SK Hynix 000660.KS and Micron Technology MU.O. The Chinese group is well-positioned to increase its DRAM market share from the current 8%, according to data from research outfit Counterpoint.

Beyond memory, Chinese contract chipmakers, led by the $122 billion Semiconductor Manufacturing International 0981.HK, are also forecast to capture a bigger slice of the market for low-end chips, where they face little or no U.S. restrictions or export controls.

Given how dependent modern economies are on such chips and how quickly China has put the squeeze on other key industry inputs like rare earths, Washington, Seoul and other governments may have little choice but to invest in bulking up secure supply chains for the semiconductor sector's least glamorous corner.

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CONTEXT NEWS

China's Changxin Memory Technologies doubled its IPO fundraising target for its Shanghai listing to 57.9 billion yuan ($8.6 billion), per an exchange filing on July 14.

Apple has begun testing memory chips made by CXMT for devices sold in China, the Financial Times reported on July 8, citing sources.

Talks between Apple and CXMT are ongoing, and Chief Executive Officer Tim Cook appealed to Trump administration officials, including Treasury Secretary Scott Bessent, to help "soften the political fallout" from a potential deal, Bloomberg reported on July 2, citing sources.