Apple stock dropped more than 3% on Thursday, following a 4% decline on Wednesday, after several reports suggested that Chinese government workers could be banned from using Apple’s iPhones. The U.S. and China tit-for-tat tech battle is starting to impact one of the most profitable and influential companies in the world — Apple.
China has banned officials at central government agencies to bring Apple iPhones into the office or use them for work, as per a report. It was unclear how widely the ban of Apple iPhone were issued in China.
China is Apple’s third-largest market, accounting for 18% of total revenue last year.
Following Ban Apple Stock Dropped
Apple stock dropped after reports that China banned iPhone use by government employees. Apple stock dropped about 3% on Thursday, following a 4% decline on Wednesday, after several reports suggesting that Chinese government workers could be banned from using iPhones.
The reported iPhone ban in China, which have not been publicly announced by the Chinese government, raise concerns that Apple’s products could get caught up in international tensions between the U.S. and China.
Greater China, including Hong Kong and Taiwan, is Apple’s third-largest market, accounting for 18% of total revenue of $394 billion. It’s also where the vast majority of Apple products are assembled. The tech giant declined to comment.
China has ordered officials at central government agencies not to bring iPhones into the office or use them for work banning the Apple product. It was unclear how widely the bans were issued. The ban could spread to other state companies and government-backed agencies.
Is Iphone Ban In China A Threat To Apple?
While a ban on all government employees could reduce iPhone unit sales in China by as much as 5%, Bernstein analyst Toni Sacconaghi wrote in a Thursday note, it would be a larger threat to Apple if the bans sent a signal that everyday citizens should instead use electronics made by Chinese companies.
Dan Niles, portfolio manager at Satori Fund, said on Thursday he sold his stake in Apple stocks and is now shorting the company, citing the possibility of a government iPhone ban and increased competition from Huawei.
Investors, fearful that iPhone ban in China could be the start of broader restrictions on Apple’s biggest selling product category in one of its most critical markets, dumped the stock Wednesday and Thursday reducing the company’s market value by nearly $200 billion.
New Competition
Last week, several Chinese retailers started taking orders for a new Huawei phone, the Mate 60 Pro, which quickly became a hot topic on social media in the country.
China – iPhone’s Biggest Market
Apple derived more than 19% of its revenue from the Greater China region in its latest quarter.
In Apple’s most recent quarter, ended in June, Greater China sales increased 8% on an annual basis to $15.76 billion. It was Apple’s fastest-growing region. On the company’s earnings call, CEO Tim Cook said Apple was seeing users switch from Android phones to iPhones, mentioning that was “at the heart” of its results.
“We continue to try to convince more and more people to switch because of the experience and the ecosystem that we can offer them,” Cook said.
In terms of iPhone shipments specifically, China surpassed the U.S. as the largest single market last quarter, according to market research firm TechInsights.
Decreasing Dependency
Both the U.S. and China have been focused on becoming more independent of each other when it comes to building technologies in order to protect their respective data flows, intellectual property and national security.
iPhone Ban In China: The Intrigue
The reports of the iPhone bans come on the heels of a high-profile visit by U.S. Commerce Secretary Gina Raimondo last week, during which she stressed that the U.S. would not budge on recent export restrictions on advanced semiconductor technology.
Bank of America analyst Wamsi Mohan also saw the timing of this week’s report as notable given the recent launch of a new high-end phone from Huawei which is apparently being powered by an advanced Chinese-made processor.
It matters: “If one of the most successful operators in the world’s second-largest economy is at risk, can any Western company thrive [in China]?” the NYT sums up.
