Apple shares fell substantially for the second day in a row wiping out nearly $200 billion of market value after allegations of regulations in China restrictions on iPhone’s at government buildings and state-backed enterprises, amid rising tensions between China and the US.
In late morning trading on Thursday, shares of the world’s largest publicly traded corporation were down 2.8 percent at $177.79, after sliding 3.6 percent on Wednesday following a Wall Street Journal story that China had banned the use of Apple cellphones in core government offices.
On Thursday, Bloomberg News reported that China planned to extend the prohibition to government-backed agencies and state-owned enterprises, increasing the policy’s impact in a centrally controlled economy.
The action came as tensions between Beijing and Washington grew.
As technology has become a critical national security problem for Beijing and Washington, China has prioritised the use of locally created tech products. Both countries’ government agencies and state-owned enterprises (SOEs) were the first and most important to launch such a campaign.
According to Bloomberg, the unveiling last week of a Huawei smartphone with a made-in-China chipset was celebrated as a “triumph” in the aftermath of US sanctions in Chinese state media.
Government employees warned over Apple iPhone
Employees in at least three ministries and government entities were warned not to use iPhone’s at work, according to persons acquainted with the situation who declined to be identified owing to the sensitivity of the subject.
One of the individuals stated that they had not yet been given a date to stop using their iPhone’s, and it was unclear how widespread the restriction was being implemented.
Apple and China’s State Council Information Office, which handles media inquiries on the government’s behalf, did not reply quickly to demands for comment.
According to the state-owned Chinese financial journal Economic Observer, certain government departments enacted policies in 2020 to prohibit officials from using iPhone’s due to Apple’s strong privacy restrictions, which make it difficult for anti corruption agents to access and examine suspects’ phones.
China is one of Apple’s most important markets, accounting for approximately one-fifth of its revenue. Apple and its suppliers employ thousands of people in China, and CEO Tim Cook emphasised the company’s long history with the country during a March visit to Beijing.
Beijing Specifically Targeted Apple
The extension of a ban imposed more than two years ago indicates that the US corporation, which relies significantly on China for revenue development and manufacturing, is facing growing hurdles.
“We believe the restrictions have the potential to slow Apple’s sales growth in China,” according to D A Davidson analyst Tom Forte.
“This could pose an additional challenge for the company, as its revenues from China have already been impacted by the country’s challenging macroeconomic environment.”
According to Briefing.com analyst Patrick O’Hare, the Apple problem has ramifications for other technology companies. “The market is concerned that if China deliberately chooses to make business difficult for a company like Apple, which has a good and important working relationship in China, it can do so for a lot of other US companies doing business in China,” O’Hare said.
The chairman of the US House China Committee said the restriction was “not surprising.”
“This is textbook Chinese Communist Party (CCP) behaviour: promote PRC [People’s Republic of China] national champions in telecommunications while gradually limiting market access for Western companies,” US Representative Mike Gallagher told Reuters.
“American tech companies looking to cosy up to the CCP must realise the clock is ticking,” Republican Gallagher warned.