Stocks & Funds

Apple’s Stock Plummets as China Imposes iPhone Ban on Government Officials

Apple Stock falls China ban

The Apple stock fell about 3%, following a 4% decline on Wednesday, after reports suggested that iPhones might be banned for Chinese government workers.

According to reports, Apple’s products could be caught up in international tensions between the U.S. and China as a result of the reported restrictions, which the Chinese government hasn’t publicly announced.

Apple’s third-largest market, including Hong Kong and Taiwan, accounts for 18% of its total revenue of $394 billion. The tech giant declined to comment on the matter.

Apple stock continuously declined after iPhone ban in china by Chinese government

On Wednesday, the Wall Street Journal reported that Chinese officials have been forbidden from using iPhones at work or bringing them into the office. It was unclear how widely the bans were enacted. Bloomberg News reported on Thursday that the ban could extend to other state-owned companies and government-backed organizations.

As Bernstein analyst Toni Sacconaghi noted in a Thursday note, a ban on all government employees could reduce iPhone sales by as much as 5%, but a ban that sends a signal that everyday citizens should instead use Chinese electronics would pose a larger threat to Apple.

In addition to negatively impacting sales among consumers (related family members; general populace), Sacconaghi wrote that the restrictions on iPhone use could be part of a broader Chinese government effort to promote domestic technology.

According to Dan Niles, portfolio manager at Satori Fund, he sold his stake in Apple and is now shorting the company, citing the possibility of a government iPhone ban.

A new competition has begun

In Chinese social media last week, several retailers began taking orders for a new Huawei phone, the Mate 60 Pro.

Early tests suggest that the phone can access 5G speeds, although Huawei’s specification pages do not mention it. The phone starts at 6,900 RMB, or about $954.

As a result of fears that Huawei’s technology could give the Chinese government backdoor access to communications, Huawei was placed on the U.S. entity list in 2019. In order to supply Huawei, U.S. companies like Google and Qualcomm must get permission from the U.S. government first. As a result of the sanctions, Huawei’s phone business significantly declined, forcing it to spin off some of its phone brands and resulting in a $12 billion shortfall by 2020.

Using 7-nanometer production, Huawei’s new phone has a chip. Smaller production processes typically result in faster and more efficient chips. In 2018, Apple used a 7nm process to make its A12 chips, which were used in new iPhones, but the upcoming iPhone is expected to use a 3nm process manufactured by Taiwan Semiconductor Manufacturing Co.

The Huawei chip raises questions about the effectiveness of separate restrictions on chip-manufacturing technology, which aim to prevent Chinese companies from making cutting-edge processors.

From my perspective, it tells us that the United States should continue to impose a ‘small yard, high fence’ set of technology restrictions focusing on national security concerns, not on the broader question of commercial decoupling, Jake Sullivan, the U.S. national security advisor, said Tuesday.

The company’s sales in Greater China grew 8% on an annual basis in its most recent quarter, ending in June. In Apple’s earnings call, CEO Tim Cook said the company was seeing users switch from Android phones to iPhones, pointing out that was “at the heart” of its results.

According to Cook, “we continue to try to convince more and more people to switch because of the experience and ecosystem we can offer.”

Due to regulatory moves in China and Europe, Apple stock market capitalization has dropped roughly $191 billion over the last two days.

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Editorial Director
I'm Shruti Mishra, Editorial Director @Newsblare Media, growing up in the bustling city of New Delhi, I was always fascinated by the power of words. This love for words and storytelling led me to pursue a career in journalism. In this position, I oversee the editorial team and plan out content strategies for our digital news platform. I am constantly seeking new ways to engage readers with thought-provoking and impactful stories.

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