Apple shares took a hit when reports emerged that China was banning officials at central government agencies from using or bringing foreign-branded iPhones and other devices to their workplaces.
According to the Wall Street Journal, these instructions were conveyed to Chinese officials in chat groups or workplace meetings in recent weeks. However, it is still unclear to what extent these orders have spread.
The report significantly affected Wall Street stock indices, causing Apple shares to drop 3.6%.
China represents one of Apple’s largest markets, accounting for almost a fifth of its revenue.
On Wednesday, several analysts commented that the reported action demonstrated Beijing’s determination to reduce its dependence on American technologies and indicated that no American company would be exempt from this effort.
“Not even Apple is immune… in China, where it employs hundreds of thousands, if not more than a million workers, to assemble its products through its relationship with Foxconn,” DA Davidson analyst Tom Forte said.
This development “should encourage companies to expand their supply chains and customer bases, reducing their dependence on China if tensions rise further.”
The ban could raise concerns among foreign companies operating in China, particularly as tensions between China and the United States escalate.
It also coincides with an upcoming Apple event next week, which analysts believe will focus on the launch of a new line of iPhones.
The WSJ report does not mention any other phone makers besides Apple. Both Apple and China’s State Council Information Office, responsible for handling media inquiries on behalf of the Chinese government, did not quickly respond to Reuters requests for comment.
This recent restriction in China is reminiscent of similar bans imposed in the United States against Chinese smartphone maker Huawei Technologies and short video platform TikTok, owned by China’s ByteDance.
China has been striving to reduce its dependence on foreign technologies for more than ten years.
This effort includes urging state-affiliated companies, such as banks, to transition to domestic software and encouraging the growth of the local semiconductor chip manufacturing industry.
Analysts have noted that Huawei recently introduced a 5G smartphone with a highly advanced silicon chip.
This achievement was initially considered beyond their capabilities due to US-led export restrictions.
The Mate 60’s processor is a breakthrough as it uses SMIC’s advanced 7nm technology, signaling China’s progress in building a domestic chip ecosystem, TechInsights says.
Tensions between China and the United States are rising, with the United States blocking China’s access to equipment crucial to the chip industry and China limiting shipments from American companies such as Boeing and Micron.
Apple’s profits are not immediately affected, given the popularity of the iPhone in China, according to CFRA Research analyst Angelo Zino.
During a recent visit to China, U.S. Commerce Secretary Gina Raimondo acknowledged the concerns of American companies, calling China a country not to invest in due to risks, fines and raids.
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