Apple Lost $200 Billion in Two Days After Reports of iPhone Ban in China

Apple (AAPL) shares recently experienced a 2.9% decline, triggered by reports of China’s intention to extend its ban on the use of iPhones to government-affiliated agencies and companies.

This development has raised concerns among investors regarding Apple’s ability to maintain its foothold in the world’s second-largest economy.

Apple recorded its most significant daily drop in over a month on Wednesday, witnessing a loss of approximately $200 billion in just two days. The company’s stock currently ranks as the poorest performer in the Dow Jones Industrial Average.

These bans present a potentially ominous outlook for Apple, as China constitutes the largest foreign market for the tech giant’s products. Chinese sales accounted for roughly a fifth of Apple’s total revenue last year, although the company does not disclose iPhone sales by country. However, research firm TechInsights estimates that China outpaced the United States in iPhone sales during the last quarter. Moreover, the majority of Apple’s iPhones are manufactured in Chinese factories.

Analyst Brandon Nispel of KeyBanc Capital emphasized Apple’s significance in Beijing’s economy. Historically, Apple has been viewed as relatively secure from government restrictions in China due to its substantial economic contribution. However, the reported bans have raised questions about a potential shift in the government’s stance.

The Wall Street Journal reported on Wednesday that China had prohibited the use of iPhones for central government officials, with notifications sent to staff through chat groups and meetings. On Thursday, Bloomberg revealed that these bans had been extended to state-backed firms, including energy giant PetroChina, which employs millions of workers and plays a substantial role in the Chinese economy.

In addition to the iPhone ban, Chinese manufacturer Huawei recently released a high-end flagship smartphone, sparking interest among analysts due to its timing. The US government initiated an investigation into this new smartphone, expressing concerns about potential bypassing of American restrictions on semiconductor exports to create the device.

The news of the iPhone ban and the US government’s probe into Huawei’s smartphone had a ripple effect on tech companies, with the Nasdaq Composite declining by approximately 0.9% on Thursday and the semiconductor sector experiencing a drop of over 2%.