Apple Shares Decline Amid Reports of Chinese Government iPhone Ban

Apple Inc. has seen its shares tumble for the second consecutive day following reports of a ban on Chinese government employees using iPhones.

This development has led to a more than 6% decline in the tech giant's stock market valuation, amounting to almost $200 billion (£160 billion) in losses over the past 48 hours.

Impact on Apple's Key Market

China is Apple's third-largest market, accounting for 18% of its total revenue in the previous year. Moreover, a significant portion of Apple's products is manufactured in China through its primary supplier, Foxconn.

The Wall Street Journal (WSJ) first reported that the Beijing government had instructed central government agency officials not to bring iPhones into the office or use them for work. Bloomberg News later suggested that this ban could extend to workers in state-owned companies and government-backed agencies.

According to sources cited by the WSJ, these instructions were conveyed to officials by their superiors in recent weeks. It is worth noting that restrictions on other foreign-branded devices have also been imposed. While some agencies already had iPhone bans in place, the recent reports suggest a broader implementation of this policy.

What Are the Implications for Apple and Its Suppliers?

The reports emerged just ahead of the anticipated launch of the iPhone 15, expected to occur on September 12.

On Chinese social media platforms, some individuals employed by state-owned companies claimed to have been instructed to cease using Apple devices by the end of September. One individual humorously pondered, "What should I use for work?" as they expressed concerns about the cost of replacing their devices.

Apple, with a stock market valuation approaching $2.8 trillion, holds the highest market valuation globally. The decline in Apple's shares has had a ripple effect on some of its suppliers. Qualcomm, the world's largest supplier of smartphone chips, experienced a more than 7% drop in its stock on Thursday. South Korea's SK Hynix also saw its shares fall by approximately 4% on Friday.

Escalating US-China Tech Tensions

The ongoing tensions between the United States and China concerning technology have contributed to these developments. Both countries have imposed various restrictions, with Washington and its allies limiting China's access to critical chip technology this year.

China responded by imposing export restrictions on two materials crucial to the semiconductor industry. The Chinese government is also reportedly establishing a $40 billion investment fund aimed at bolstering its domestic chip manufacturing industry.

Last week, Chinese tech giant Huawei unveiled its Mate 60 Pro smartphone during a visit by US Commerce Secretary Gina Raimondo to Beijing. The phone features a new 5G Kirin 9000s processor developed by China's largest contract chipmaker, SMIC. This development marks significant progress in China's semiconductor industry.

US Congressman Mike Gallagher, who chairs the House of Representatives committee on China, has called on the Commerce Department to implement additional export restrictions on Huawei and SMIC.

Furthermore, Apple released an emergency software update for numerous old and current devices after an unknown hacker group exploited a security vulnerability. The update was issued following the discovery of this novel hacking technique by digital rights investigators at Citizen Lab. This marks the 15th time this year that Apple has been compelled to release comprehensive security updates.

These developments underscore the complexities and challenges that technology companies like Apple face when operating in the global market, particularly amid ongoing geopolitical tensions and cybersecurity concerns.