The tech giant Apple, known for its iconic iPhone, has encountered a significant setback as China allegedly imposed an unofficial ban on government officials owning or using iPhones.
This move resulted in a 4 percent drop in Apple’s shares on Wednesday, followed by a 3 percent decline on Thursday.
In just two days, Apple’s market capitalization plummeted by approximately $20 billion (₹16.61 lakh crores).
As of Thursday, September 7, Apple’s shares closed at $177.56 on the Nasdaq, a noticeable drop from the $189.7 price on September 5, 2023.
The company’s market cap currently stands at $2.78 trillion.
Reasons Behind the iPhone Ban in China
Although the ban on iPhones in China has not been officially announced, reports suggest that government officials have been instructed not to bring iPhones to their offices or use them for official tasks. While the full scope of the ban remains uncertain, Bloomberg reports indicate that it could expand.
Impact of China’s iPhone Ban on Apple’s Revenue
China, Hong Kong, and Taiwan collectively represent a crucial market for Apple, ranking as its third-largest market globally.
Approximately 18 percent of Apple’s recent revenue, totaling $39.4 billion, is generated from this region.
Furthermore, a significant portion of Apple’s products is assembled in China.
If all government employees in China are prohibited from using iPhones, the company could potentially experience a 5 percent drop in sales.
Analyst Warnings: Potential Consequences for Apple
Toni Sacconaghi, an analyst at Private Wealth Management Bernstein, expressed concerns about the ban’s impact in a note on Thursday.
While the ban currently applies only to government employees, Sacconaghi warned that if it leads to a broader shift in public perception, causing consumers to opt for Chinese-made products over Apple, the consequences could be severe.
The note highlights the possibility of a ripple effect, with family members and the general public distancing themselves from Apple.
Huawei’s Opportunity Amidst iPhone Ban
Interestingly, the ban on Chinese government officials using iPhones coincides with recent developments related to Huawei.
Some Chinese retailers began accepting orders for Huawei’s new phone, the Mate 60 Pro, last week.
This smartphone, priced from 6900 RMB ($954, roughly ₹79,000), features a chip developed in China by Huawei’s subsidiary, HiSilicon.
Although not officially listed, initial tests suggest that the phone can operate at 5G speeds.
The ban on Huawei by the US in 2019, which led to its inclusion on a list of potential national security threats, adds an intriguing dimension to this development.