On Thursday, Apple’s stock went down by 2.9% because of news that China wants to stop iPhones from being used by government-related organizations and businesses. This is causing concern among investors about how the world’s most valuable publicly traded company will continue doing business in China, the world’s second-largest economy.
On Wednesday, Apple’s stock (known as AAPL) had its biggest one-day drop in over a month, resulting in a loss of about $200 billion in market value in just two days. Right now, Apple’s stock is performing the worst in the Dow Jones Industrial Average.
These bans are worrying for Apple. China is the company’s biggest market outside the United States, accounting for about a fifth of its total revenue last year. Although Apple doesn’t disclose specific iPhone sales by country, analysts estimate that more iPhones were sold in China than in the United States last quarter. Plus, a lot of iPhones are made in Chinese factories.
Apple, based in Cupertino, California, plays a significant role in Beijing’s economy, which is why it has typically been seen as safe from government restrictions in China. But these new bans raise a critical question: Is the government changing its stance?
iPhone Bans and Impact on Tech Industry
As reported, China has banned central government officials from using iPhones, and managers are informing their employees about this ban through chats or meetings.
On Thursday, these bans have now been expanded to include state-affiliated companies like the huge energy company PetroChina, which employs millions of workers and has a big impact on various parts of the Chinese economy.
Analysts from Bank of America noted on Thursday that it’s interesting timing for this potential iPhone ban, as it coincides with the launch of a new high-end smartphone by the Chinese company Huawei.
On Tuesday, the US government announced an investigation into Huawei’s new smartphone. National Security Adviser Jake Sullivan said that they need more information about the phone’s features and components to determine if it violates American restrictions on semiconductor exports.
In response to all this news, technology companies saw their stock prices drop. The Nasdaq Composite, which includes many tech firms, fell by about 0.9% on Thursday, and the semiconductor industry saw a decline of over 2%.
Apple and China’s Ministry of Foreign Affairs for comments but hasn’t received any responses yet.
iPhone, China bans have sent shockwaves through the tech industry, with Apple’s stock plummeting and concerns about its future in China growing. The expansion of bans to state-affiliated companies like PetroChina adds complexity, while the timing aligning with Huawei’s new smartphone launch raises questions.
A US investigation into Huawei further underscores the uncertainty, leading to declines in technology stocks. Responses from Apple and China’s Ministry of Foreign Affairs remain awaited, leaving the situation in flux.