Apple, the American tech giant famous for its iPhone, has faced a substantial setback in the wake of an unverified decision by China. Reports suggest that Chinese government officials have been instructed not to use iPhones for official purposes, leading to a 7% decline in Apple’s stock over just two days.
China’s Unverified iPhone Ban
While the ban has not been officially confirmed, it has already had a significant impact on Apple’s financial standing. On Thursday, Apple’s shares closed at $177.56 on Nasdaq, a notable drop from the $189.7 price on September 5. Consequently, Apple’s market capitalization has dwindled by approximately $20 billion (equivalent to Rs 16.61 lakh crore) in just 48 hours. Currently, its market cap stands at $2.78 trillion.
The implications of this reported iPhone ban in China are substantial for Apple. China, alongside Hong Kong and Taiwan, represents its third-largest market globally, contributing approximately 18% of its recent $39.4 billion revenue. Moreover, a significant portion of Apple’s products is assembled in this region. If the ban extends beyond government employees to the general population, Apple’s sales in China could decline by as much as 5%.
The Potential Impact on Apple
Toni Sacconaghi, an analyst at private wealth management firm Bernstein, has expressed concern that while the initial impact stems from the ban on government officials, it may send a signal to the public, potentially leading them to opt for Chinese brands over Apple products.
Remarkably, this ban on iPhones for Chinese government officials coincides with the availability of Huawei’s new phone, the Mate 60 Pro, in Chinese stores. This smartphone, starting at 6900 RMB (approximately $954 or Rs 79,000), is equipped with a chip manufactured by Huawei’s Chinese subsidiary, HiSilicon. Despite this, the phone’s specification page does not officially mention 5G capability, although initial tests have shown it can operate at this speed. This development follows Huawei’s previous inclusion in the US list of potential security threats in 2019, leading to trade tensions between the US and China.