Apple’s stock experienced a decline following Beijing’s decision to impose restrictions on the use of iPhones by government employees. This move has sparked concerns among U.S. lawmakers and caused fears about the potential impact on American tech companies heavily exposed to China. The rising tensions between the two countries, can have huge negative impact on the tech industry. The business suffered a $200 billion loss in just two days, and its stock is currently underperforming.
On Thursday, Apple’s stock experienced a 2.9% decline in response to news that China intends to widen its ban on iPhones, extending it to government-affiliated organizations and enterprises. This development has raised concerns among investors about the challenges facing the world’s most valuable public company in conducting business within the world’s second-largest economy. Apple set for biggest two-day drop since November,
China stands as the largest foreign market for the company’s products, with Chinese sales accounting for roughly one-fifth of its total revenue in the previous year. These bans could a big trouble for Apple. Research at a firm TechInsights estimates that China had more iPhone sales than the United States in the last quarter. Additionally, the majority of Apple’s iPhones are made in Chinese facilities.
In recent months, tensions between the United States and China have escalated. Many Wall Street analysts have pointed out that the restrictions imposed shows that even a company with good relationship with the Chinese government and large presence in the world’s second-biggest economy is not immune to the growing tensions between the two countries. The friction between the U.S. and China has intensified as the U.S. seeks to limit China’s access to crucial technologies, including cutting-edge chip technology, while China aims to reduce its dependence on American technology. According to reports, China initially banned the use of iPhones for central government officials, and later, the ban was extended to state-backed firms. One of the firms is PetroChina, which employs millions and play a substantial role in China’s economy. Bank of America analysts noted that this potential iPhone ban coincides with the release of a new high-end flagship smartphone by Chinese manufacturer Huawei, suggesting a potential competitive aspect
Apple derives nearly 20% of its revenue from China, making it a key market for the company. Nevertheless, Apple might experience a surge in demand following an upcoming event where they are expected to introduce their iPhone 15 and new smartwatches
