Apple shares tumble after reports of China iPhone ban

Sep 8, 2023, 8:35am EDT
The Apple Inc. logo is seen hanging at the entrance to the Apple store on 5th Avenue in Manhattan, New York, U.S., October 16, 2019. REUTERS/Mike Segar/File Photo
REUTERS/Mike Segar/File Photo
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Apple’s shares tumbled after reports that China was restricting the use of iPhones by government employees. The company lost $200 billion dollars, or roughly 6% of its overall valuation, in the past two days.

The Wall Street Journal reported on Wednesday that Beijing told state officials they could no longer use iPhones for work or bring them into offices.

Beijing's shift away from Apple products comes as the firm prepares to launch the iPhone 15. Fears are rising that the new model won't take off in China, a key market, as consumers reject foreign devices. But it isn't the first challenge the tech behemoth has confronted in the country. After sales of the iPhone XR faltered five years ago, Apple CEO Tim Cook blamed a surge in Chinese nationalist attitudes for the poor uptake in an internal memo to employees, Bloomberg reported.1

Apple has become the biggest pawn in splintering U.S.-China relations, Dan Gallagher wrote for The Wall Street Journal. Apple's largest manufacturing operations are in China, and with the iPhone marking about 52% of the company's overall sales, it is a relatively easy target in the ongoing economic Cold War between the two nations, Gallagher said. "If Apple can’t dodge the bullets between the U.S. and China, who really can?"2

Chinese telecom giant Huawei is ramping up competition against Apple. The company has developed a phone that is capable of hitting 5G speeds with a new chip that does not require tech which was restricted by the U.S.'s export ban last year. The new tech effectively circumvents the U.S.'s export controls. "If Huawei has the capability to supply and scale its home-grown Kirin 9000S (chips), we see the Mate series phone as an opportunity for Huawei to increase its shipments and regain its market share," analysts at BofA Global Research told Reuters.3