Apple Business Suffers Amid Uncertainty Over Chinese Govt iPhone Ban

china ban iphone

Apple’s stock price dropped 3% on Thursday and 4% on Wednesday due to reports suggesting that Chinese government workers might be prohibited from using iPhones. These unconfirmed restrictions have raised concerns about Apple getting caught in the international tensions between the US and China.

Greater China, which includes Hong Kong and Taiwan, is Apple’s third-largest market, making up 18% of its total revenue of $394 billion. It’s also where most Apple products are made. However, Apple has declined to give any comment on these reports.

China has reportedly told officials at government agencies not to bring iPhones to work. It’s unclear how widespread these bans are, but they could extend to other state-owned companies and government-supported organizations.

If all government employees are banned from using iPhones, it could reduce iPhone sales in China by up to 5%, according to analyst Toni Sacconaghi. However, the bigger concern for Apple would be if these bans encourage regular citizens to switch to Chinese-made electronics.

Dan Niles, a portfolio manager, sold his Apple shares and is now betting against the company. He cited the potential government iPhone ban and increased competition from Huawei as reasons for his decision.

Huawei, a Chinese tech company, recently launched a new phone called the Mate 60 Pro, which gained attention on Chinese social media. The phone uses a chip made by Huawei’s subsidiary, HiSilicon, and is priced starting at 6,900 RMB (about $954). While early tests suggest the phone supports 5G, Huawei’s specifications don’t mention this capability.

Huawei has faced challenges in the US, as it was placed on an entity list in 2019 due to concerns about its technology potentially granting the Chinese government access to communications. This restricted Huawei’s access to American suppliers like Google and Qualcomm. These restrictions hurt Huawei’s phone business and led to the spin-off of some phone brands.

Huawei’s new chip uses a 7-nanometer production process, similar to Apple’s previous chips, while the upcoming iPhone is expected to use a more advanced 3nm process. This raises questions about the effectiveness of restrictions on chip manufacturing technology aimed at preventing Chinese companies from producing cutting-edge processors.

In Apple’s most recent quarter ending in June, sales in Greater China increased by 8% year-on-year to $15.76 billion, making it the company’s fastest-growing region. Apple CEO Tim Cook mentioned that more users were switching from Android phones to iPhones, which was a key driver of their results.

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