The US-China conflict has taken center stage in the smartphone market, affecting Apple’s business in China. Two recent events in China have triggered this impact: the release of Huawei Technologies’ Mate 60 phone, and the expansion of the ban on iPhones by Chinese government agencies.
Analysts are now closely studying the surge in patriotic sentiment and predict that Huawei’s new phone could potentially affect up to 38% of iPhone sales in China. This is particularly significant considering that government agencies are major consumers of devices in China and set trends for the wider business community.
This scenario reminds us of China’s previous actions, such as the establishment of the Great Firewall, which separated its population from US internet services like Google and Facebook. This move ultimately fueled the rise of internet giants Alibaba Group Holding and Tencent Holdings.
Now, the influence of Huawei on Apple’s business in China raises intriguing questions about the role of geopolitics in the hardware industry. Previously, market forces determined the success or failure of companies like Nokia and BlackBerry. However, the gradual escalation of geopolitical tensions, exemplified by the US government’s restrictions on Huawei, has added a new layer of complexity.
The importance of government agencies as consumers of devices in China can’t be overstated
In 2019, the Trump administration’s actions severely impacted Huawei’s smartphone business by restricting access to key technologies and software. While the US argued that these actions were essential for national security, they have also fueled China’s response.
In the end, blame can be attributed in both directions. The US brutalized Chinese businesses unnecessarily, and China now responds with its own moves. As a result, a significant portion of the Chinese market may disregard Apple’s new phones, despite their technological advancements.
This geopolitical storm not only impacts Apple but also presents a captivating narrative for the year ahead. While we expected artificial intelligence to be the dominating tech story, it seems that the US-China conflict will play a major role as well.
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