Apple’s stock prices have experienced consecutive declines over the past two days, with a 3% drop on Thursday. This decline was attributed to reports that Chinese government agencies may ban the use of iPhones. CEO Tim Cook had previously described Apple’s relationship with China as “symbiotic” during a visit to Beijing in March. The value of Apple stock currently stands at $177.55, down 2.92%, marking a second consecutive day of decline. However, after-hours trading has seen a slight increase to $178.10.
The initial price drop on Thursday is a result of a report by The Wall Street Journal that the Chinese government has instructed government agencies to avoid using iPhones and other foreign-made devices at work. Bloomberg also reported that China intends to extend this ban to state-owned companies as well. China, Hong Kong, and Taiwan account for 18% of Apple’s projected revenue for 2022, amounting to $394 billion. Additionally, Apple manufactures a significant portion of its products in China.
Analyst Toni Sacconaghi from Bernstein suggests that a complete ban on iPhones for all Chinese government employees could potentially reduce Apple’s phone sales in China by up to 5%. Sacconaghi also points out that this ban may have a broader impact on consumer sales and contribute to the Chinese government’s promotion of domestic technology. Apple is further challenged in the Chinese market by increasing competition from Huawei, particularly after U.S. sanctions significantly impacted Huawei’s sales in most markets in 2021. Huawei recently released the new Mate 60 Pro phone, posing new competition for Apple in China.
However, tech analyst Dan Ives believes that the impact of the Chinese government’s iPhone ban is exaggerated. Ives argues that even in a worst-case scenario, where all China government agency employees are banned from using iPhones, this accounts for less than 500,000 iPhones out of the approximately 45 million expected to be sold in China within the next year. Ives expresses confidence in future iPhone releases, stating, “iPhone 15 on deck.”
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