Apple and Other Tech Stocks Plummet as China Bans iPhones for Officials
Earlier this week, Chinese authorities imposed a ban preventing officials from central government institutions from using iPhones and other foreign-brand devices for work purposes. These gadgets can’t even be brought into government-owned buildings. As a result of this development, Apple’s stock price dropped by 4% on Wednesday and another 3% on Thursday, causing the company to lose approximately $194 billion in market value.
Mainland China, along with Hong Kong and Taiwan, constitutes the third-largest market for Apple, accounting for 18% of its total revenue of $394 billion. It’s also the largest market for iPhone sales. Additionally, much of Apple’s product assembly takes place in China. According to sources, the ban on the use of iPhones and other foreign devices by government officials may extend to employees of state-owned enterprises and other organizations receiving government support. Such a ban could affect a significant portion of the country’s population, which numbers over 1.4 billion, and an economy heavily influenced by the state.
According to analysts at Bernstein, the ban on iPhones for officials could decrease Apple’s smartphone sales in China by 5%. However, a more significant threat to Apple’s business in China could emerge if these restrictions prompt regular consumers to opt for electronics produced by local companies.
In addition to this, Apple may face increased competition from Huawei. Local retailers began taking pre-orders for the new Huawei Mate 60 Pro, priced at around $955, last week. The device is said to be powered by a 7nm HiSilicon processor, a subsidiary of Huawei, and initial tests revealed 5G support, despite this feature not being mentioned in the device’s description. In light of this, the U.S. Department of Commerce has initiated an investigation to determine the origin of the advanced HiSilicon processor, which has shown the ineffectiveness of anti-China sanctions.
As for the ban on officials using iPhones, it could affect a significant portion of Apple device users in China. According to China’s National Bureau of Statistics, around 56.3 million people worked in “government units” in 2021. While it’s impossible to determine how many of them prefer Apple devices, several million would certainly impact Apple’s sales, as the company typically sells around 230 million iPhones globally each year.
In response to the severe U.S. sanctions in the technology sector, China is gradually imposing restrictive measures that harm the businesses of American companies, including Micron, Qualcomm, Intel, and Applied Materials. Further sanctions on Apple by Chinese authorities could have serious consequences for many industry players, as iPhone manufacturing is one of the world’s largest purchasers of semiconductor products and various components for its devices. The potential sanctions by Chinese authorities against Apple led to a 2% drop in the PHLX Semiconductor index, and companies like Qorvo and Skyworks, which supply key radio frequency chips for iPhones, saw their stock prices drop by approximately 7%. In this context, shares of HP and Dell, American computer manufacturers with production facilities in China, fell by more than 2%.
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- I'm Vasyl Kolomiiets, a seasoned tech journalist regularly contributing to global publications. Having a profound background in information technologies, I seamlessly blended my technical expertise with my passion for writing, venturing into technology journalism. I've covered a wide range of topics including cutting-edge developments and their impacts on society, contributing to leading tech platforms.
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