Apple Stock Dips as China Bans iPhone Sparks Investor Concerns

09 Sep, 2023

Apple Stock Dips as China Bans iPhone Sparks Investor Concerns

Apple, a tech giant, has witnessed a significant setback in its stock market value, plummeting by over 6% or nearly $200 billion within the past two days. This downturn is primarily attributed to the alarming reports of a ban on iPhones by the Chinese government, impacting Apple's third-largest market, which contributed 18% of its total revenue last year.

Notably, China serves as the epicenter for the production of most Apple products through its primary supplier, Foxconn. The ban, initiated in Beijing, instructs central government agency officials to abstain from using iPhones for work purposes, a restriction that might extend to state-owned companies and government-backed agencies.

These directives, communicated from higher authorities in recent weeks, are speculated to encompass other foreign-branded devices. Although the scope of these instructions within Chinese officialdom remains unclear, it has already affected some state-owned company employees, who now face the dilemma of finding alternative work devices.

The timing of these reports is critical, coinciding with the imminent launch of the iPhone 15 scheduled for September 12. Apple's heavy reliance on the Chinese market is evident, with a considerable portion of its iPhones manufactured within the country, albeit with recent efforts to expand production in India.

Surprisingly, there has been no official statement from the Chinese government regarding these reports. This incident has repercussions not only for Apple but also for its suppliers. Qualcomm, the world's leading smartphone chip supplier, witnessed a 7% decline in its shares, while South Korea's SK Hynix experienced a 4% drop.

The escalating tensions between the United States and China in the tech sphere have already led to restrictions on both sides. Washington, along with Japan and the Netherlands, limited China's access to crucial chip technology, prompting China to retaliate by restricting exports of key semiconductor materials. Additionally, China is reportedly establishing a $40 billion investment fund to bolster its chip manufacturing industry.

Huawei, a prominent Chinese tech giant, recently unveiled its Mate 60 Pro smartphone during US Commerce Secretary Gina Raimondo's visit to Beijing, further emphasizing China's strides in the semiconductor industry. TechInsights, a Canada-based technology research firm, highlighted the new 5G Kirin 9000s processor in the phone, symbolizing China's technological advancements.

In response, US Congressman Mike Gallagher has urged the Commerce Department to impose further export restrictions on Huawei and SMIC (China's largest contract chipmaker), underscoring the intensifying tech rivalry between the two superpowers.