Apple Loses $200bn As China Restricts Officials from Using iPhones

Apple’s stock experienced a sharp decline for the second consecutive day on Thursday, triggered by reports of significant restrictions on iPhones within Chinese government offices and state-affiliated organizations.

The shares of the world’s largest publicly traded company saw a 2.8 percent drop, trading at $177.79 in late morning hours. Bloomberg’s coverage indicated that Apple incurred a staggering $200 billion loss over just two days.

This downward trend began on Wednesday when shares fell by 3.6 percent, following a Wall Street Journal report revealing that China had prohibited the use of Apple smartphones within central government agencies.

On Thursday, Bloomberg News reported that China intended to extend this ban to encompass government-affiliated entities and state-run corporations. This move expanded the reach of the policy within China’s centrally-planned economy, exacerbating the impact on Apple’s stock.

The move comes amid intensifying technology tensions between Beijing and Washington.

On Wednesday, several analysts commented on the reported action, suggesting that Beijing’s decision demonstrated its unwillingness to exempt any American company from its efforts to lessen reliance on American technology.

“Even Apple is not immune … in China where it employs hundreds of thousands, if not more than a million workers, to assemble its products through its relationship with Foxconn,” DA Davidson analyst Tom Forte said.

This “should inspire companies to diversify both their supply chain and customer concentrations to be less dependent on China in the event the tensions get worse”.

The Bloomberg story said a release last week of a Huawei smartphone employing a made-in-China processor was hailed in Chinese state media as a “triumph” in the wake of US sanctions.

In the most recent quarter, Apple disclosed revenues of $15.8 billion generated from China, constituting nearly 20 percent of its total revenues. Executives highlighted the increase in sales in China during a period when overall sales were declining.

The imposition of this ban has the potential to raise concerns among foreign companies conducting business in China, especially as tensions between China and the United States continue to escalate.

This development also coincides with an upcoming Apple event scheduled for next week, which analysts anticipate will involve the launch of a new line of iPhones.

Analyst Patrick O’Hare from Briefing.com noted that the Apple situation carries implications for other tech companies.

“The worry for the market is that, if China purposely chooses to make business difficult for a company like Apple, which has a good and important working relationship in China, then it can do so for a lot of other US companies doing business in China,” O’Hare said.

According to Wedbush Securities analyst Dan Ives, a potential Chinese government ban is expected to impact fewer than 500,000 iPhones out of an estimated 45 million projected to be sold in the country over the next year.

“We believe despite the loud noise Apple has seen massive share gains in China smartphone market,” Ives said, adding that rising sales give Apple “incremental momentum on this front.”

For more than a decade, China has been actively working to decrease its dependence on foreign technologies. This effort has included encouraging state-affiliated entities, such as banks, to transition to domestic software solutions and promoting the development of domestic semiconductor chip manufacturing.

Analysts have pointed out that Huawei’s recent release of a 5G smartphone, which incorporates an advanced silicon chip with a level of miniaturization that was previously considered beyond its capabilities due to export restrictions led by the United States, represents a significant leap toward China’s goal of technological self-reliance.