Apple loses $200bn as China’s bans on use of iPhones takes full effect

Apple faces market value loss of $200bn as China bans Government use of iPhones

The iPhone company, Apple recently experienced a significant drop in its market value, losing a staggering $200 billion over the past two days. The decline was partially attributed to China’s decision to prohibit its government workers from using iPhones.

On Thursday, Apple’s shares fell by 3.4% following reports of the ban from China. This sharp decline marked the most significant daily fall for the company in over a month, making Apple one of the worst performers in the Dow Jones Industrial Average.

China’s ban and apple’s market impact

Apple faces market value loss of $200bn as China bans Government use of iPhones

According to a report, China is the largest foreign market for Apple products, with Chinese sales contributing approximately a fifth of the company’s total revenue last year. This ban on government use of iPhones is, therefore, significant.

This is considering Apple’s dominant presence in the Chinese smartphone market and its role as a significant employer through its contract manufacturers and suppliers in the country. As most Apple products are assembled in China, the iPhone ban has the potential to result in a substantial loss of revenue, estimated to reach $200 billion.

China’s decision to ban government agencies and state-owned companies from using iPhones has been influenced by both national security and economic considerations. Beijing wants to lessen its reliance on foreign technology, notably American software and circuitry.

This is in order to prevent the flow of sensitive information outside its borders. China hopes to strengthen its indigenous tech industry and preserve its interests by enacting this restriction.

Read Also: China to expand ban on iPhones to Government-backed companies

Implications for Apple’s market position and China’s decision

China to expand the ban on iPhones in some government-backed departments

Beijing’s plan to extend the ban on iPhones to government-backed agencies and state-owned enterprises poses significant challenges for Apple in its largest foreign market and global production base.

By reducing reliance on foreign technology, China intends to strengthen its own tech sector and decrease its vulnerability to external influences. This move puts Apple’s position in the Chinese market at risk and threatens to disrupt its extensive supply chain.

China’s efforts to minimize foreign technology used in sensitive environments could have far-reaching consequences for Apple. The Chinese market represents a critical source of its revenue, accounting for approximately 20% of the company’s earnings.

Moreover, China serves as the primary manufacturing location for iPhones, with sprawling factories that employ millions of Chinese workers. If the ban is effectively enforced, Apple’s market position could be eroded, and its supply chain may face disruptions.

 According to a report, China played a significant role in Apple’s last quarter results, helping offset a generally slow period. Apple sales for the fiscal third quarter that ended on July 1 fell by 1.4% to $81.8 billion and earnings per share rose 5% to $1.26.

That topped analyst expectations of $81.69 billion and $1.19 per share. Although weaker iPhone sales were balanced by strong sales in the services segment that contains Apple TV+ and by sales in China that grew 8% year over year.

The company is set to unveil its latest iPhones in the upcoming week, gearing up for the holiday quarter, which traditionally represents its highest sales period of the year.

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