Apple Inc. is facing a significant setback as its stock plummeted by 2.9% after China announced plans to extend its ban on iPhones to include government-backed agencies and corporations.
This development has led to heightened investor concerns about Apple's ability to maintain its business operations in China, the world's second-largest economy.
Within two days, Apple lost nearly $200 billion in market value, making it the worst-performing stock in the Dow Jones Industrial Average.
China is not just another market for Apple; it's a cornerstone. According to estimates, Chinese sales constituted about one-fifth of Apple's total revenue last year.
Research firm TechInsights even suggests that iPhone sales in China surpassed those in the United States in the last quarter. Moreover, the majority of iPhones are manufactured in Chinese factories, making the country integral to Apple's supply chain.
Interestingly, the ban comes at a time when Chinese tech giant Huawei has released a new high-end flagship smartphone. Analysts have pointed out that the timing is "interesting," possibly indicating a strategic move to bolster domestic companies at the expense of foreign competitors like Apple.
The U.S. government is currently investigating this new Huawei smartphone to ascertain if it circumvents American semiconductor export restrictions.
Changing Stance?
Apple has historically been considered relatively safe from Chinese government restrictions, partly because of its significant role in Beijing's economy.
However, the extended ban raises questions about whether the Chinese government is altering its traditionally lenient stance towards the company.
The ripple effects of this development were felt across the tech sector. The Nasdaq Composite dropped by about 0.9%, and the semiconductor sector fell by more than 2%.
