Apple faced a significant setback as its shares plummeted by 2.9% on Thursday, following the reports of China contemplating an expansion of its ban on the use of iPhones.
The tech giant, known for its innovation and global presence, recorded its most substantial daily drop in over a month on Wednesday. Over the span of just two days, the company witnessed a staggering loss of approximately $200 billion.
This rapid downturn positioned Apple’s stock as the poorest performer within the Dow Jones Industrial Average.
Investors worldwide are growing increasingly concerned about Apple’s ability to conduct business within the confines of the world’s second-largest economy.
Implications of Apple Ban in China
The potential implications of these bans cast a looming shadow over Apple’s future in China.
The country stands as the largest foreign market for Apple’s diverse product lineup, with Chinese sales accounting for roughly a fifth of the company’s total revenue last year.
Investors got worried that Apple might face more rules about its most important product in one of its most important markets. Because of this worry, they sold a lot of Apple’s stock on Wednesday and Thursday. This caused Apple’s total value to drop by almost $200 billion.
While specific sales figures by country remain undisclosed, experts at research firm TechInsights estimate that China outpaced the United States in iPhone sales during the last quarter. Furthermore, Apple relies heavily on Chinese factories for the production of the majority of its iPhones.
The repercussions of these developments extended beyond Apple, with tech companies experiencing a downturn. The Nasdaq Composite index dropped by approximately 0.9% on Thursday, and the semiconductor sector saw a decline of over 2%.
History of Apple-China Relationship
Historically, Apple enjoyed a relatively secure position in China due to its contribution to Beijing’s economy.
Analysts, such as Brandon Nispel of KeyBanc Capital, have highlighted this aspect, emphasizing that the company “has historically been viewed as relatively safe in China from government restrictions.”
However, the recent reports of bans on iPhone usage among central government officials have prompted questions regarding a potential shift in the government’s stance toward Apple, as per Nispel.
Bans Expand to PetroChina
Adding to the complexity of the situation, it was reported that these bans have now extended to state-backed enterprises, including the colossal energy corporation PetroChina. These firms collectively employ millions of workers and wield substantial influence over China’s economic landscape.
Analysts at Bank of America noted the “interesting” timing of these bans, coinciding with the release of a high-end flagship smartphone by Chinese manufacturer Huawei.
Meanwhile, the U.S. government initiated an investigation into this new smartphone, citing concerns about compliance with American restrictions on semiconductor exports.
CNN has made attempts to reach out to both Apple and China’s Ministry of Foreign Affairs for comments, but as of now, there has been no response from either party. The situation remains fluid, and Apple’s future in the vital Chinese market remains uncertain.