On Thursday, Apple’s shares dropped by 2.9% due to China’s intention to expand its ban on iPhones to government-affiliated entities and businesses. This development has left investors concerned about Apple’s ability to conduct business in the world’s second-largest economy.
Apple, the world’s most valuable public company, experienced its biggest daily decline in over a month, resulting in a loss of approximately $200 billion over two days. Currently, the company’s stock is the weakest performer in the Dow Jones Industrial Average.
The implications of these bans are troubling for Apple. China is the largest foreign market for Apple’s products, accounting for roughly a fifth of its total revenue in the previous year. Although Apple does not disclose specific iPhone sales by country, estimates from TechInsights suggest that China may have outpaced the United States in iPhone sales last quarter and a significant portion of iPhones are manufactured in Chinese factories.
Apple, headquartered in Cupertino, California, also plays a significant role in Beijing’s economy. Historically, it has been seen as relatively secure from government restrictions due to its importance. However, recent reports of these bans raise questions about whether the government’s stance is changing.
According to the Wall Street Journal, China has already banned the use of iPhones by central government officials and has communicated this ban through chat groups and meetings. Bloomberg later reported that these bans have now extended to state-backed enterprises, including the energy giant PetroChina, which employs millions and controls substantial portions of the Chinese economy.
Analysts at Bank of America noted that this potential iPhone ban coincides with the release of a new high-end flagship smartphone by Chinese manufacturer Huawei, describing the timing as “interesting.”
Right now, the US government has initiated an investigation into Huawei’s new smartphone, with National Security Adviser Jake Sullivan stating the need for “more information about precisely its character and composition” to determine if it violates American restrictions on semiconductor exports.