Apple Stock Falls as Reports Indicate Chinese Government Bans iPhones
Shares in tech giant Apple have experienced a consecutive two-day decline in response to reports that Chinese government employees have been barred from using iPhones. The company’s market valuation has dropped by over 6%, equivalent to nearly $200 billion, within these two days. China stands as Apple’s third-largest market, contributing to 18% of its total revenue in the previous year, and is where the majority of Apple products are manufactured by its primary supplier, Foxconn.
According to The Wall Street Journal, Beijing directed officials in central government agencies to cease bringing iPhones into the workplace or utilizing them for professional purposes. Bloomberg News later revealed that this prohibition could be extended to employees at state-owned firms and government-affiliated organizations. These instructions were reportedly relayed to officials by their superiors in recent weeks, with certain foreign-branded devices also facing restrictions.
While iPhones were already prohibited in certain agencies, sources suggested that the scope of this ban has been expanded. However, it remains unclear how broadly these instructions have been communicated throughout the Chinese government. The announcements came just before the anticipated launch of the iPhone 15 on September 12.
Chinese social media platforms have seen individuals claiming to work for state-owned companies report being instructed to discontinue their use of Apple devices by the end of September. Some users humorously lamented their inability to afford a new phone, questioning what they should use for work.
China represents one of Apple’s most significant markets, with iPhones manufactured in the country, although Apple has recently increased production in India. To date, there has been no official statement from the Chinese government regarding these reports, and Apple has yet to respond to a BBC request for comment.
In addition to Apple’s stock decline, shares of some of its suppliers have also taken a hit. Qualcomm, the world’s largest supplier of smartphone chips, fell by over 7% on Thursday, while shares of South Korea’s SK Hynix dropped by around 4% on Friday.
Tensions between the US and China concerning technology have been escalating, leading both parties to impose various restrictions. This year, the US, along with its allies Japan and the Netherlands, limited China’s access to specific chip technology, prompting China to retaliate by restricting exports of two materials crucial to the semiconductor industry. Beijing is reportedly preparing a new $40 billion investment fund to bolster its chip manufacturing sector.
Last week, during a visit to Beijing by US Commerce Secretary Gina Raimondo, Chinese tech giant Huawei unexpectedly unveiled its Mate 60 Pro smartphone. The company initiated presales of the Pro+ model of the phone on Friday, which contains a new 5G Kirin 9000s processor developed for Huawei by China’s largest contract chipmaker, SMIC. Analysts have noted that this move marks significant progress for China’s semiconductor industry, calling it a “big tech breakthrough for China.”
US Congressman Mike Gallagher, chairman of the House of Representatives committee on China, has urged the Commerce Department to further restrict exports to Huawei and SMIC this week.
SOURCE: Ref Image from Inventiva
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