Following news that China intended to extend a ban on the use of iPhones to organisations and businesses with official support, Apple stock dropped 2.9% on Thursday.
Investors are concerned about the ability of the most valuable public firm in the world to conduct business in the second-largest economy in the world.
On Wednesday, Apple (AAPL) had its biggest daily decline in almost a month. The corporation suffered a $200 billion loss in just two days, and as a result, its stock is currently the Dow Jones Industrial Average’s underperformer.
The restrictions might be a bad omen for Apple.
The company’s biggest international market is China, whose sales last year accounted for nearly a fifth of the company’s overall revenue. Apple also produces the majority of its iPhones in Chinese factories.
Cupertino, California-based Apple is also crucial to Beijing’s economy According to Brandon Nispel, an analyst at KeyBanc Capital, Apple is also crucial to Beijing’s economy.
For this reason, the business “has historically been viewed as relatively safe in China from government restrictions.” He asked the crucial question: “Is the government changing its stance?” in response to the alleged prohibitions.
The Wall Street Journal reported on Wednesday that managers had been informing staff of the prohibition via chat groups or meetings and that iPhone use for central government officials had been outlawed in China.
Bloomberg revealed on Thursday that these restrictions had been extended to state-backed businesses, such as oil giant PetroChina, which employ millions of people and dominate large segments of the Chinese economy.
In a report published on Thursday, analysts at Bank of America noted that the prospective iPhone ban follows the launch of a brand-new high-end flagship smartphone by the Chinese company Huawei. Analysts found the timing to be “interesting.”
On Tuesday, the US government announced that it was looking into the new smartphone. During a White House press briefing, National Security Advisor Jake Sullivan stated that the country needs “more information about precisely its character and composition” to ascertain whether parties got through American prohibitions on semiconductor exports to produce the new chip.
The Nasdaq Composite plummeted by around 0.9% on Thursday, while the semiconductor industry fell by more than 2% as a result of the news, which caused a decline in IT sector.