Apple shares dropped 2.9% on Thursday following reports that China intends to extend a ban on the use of iPhones to government-backed agencies and companies.
Investors are concerned about the ability of the most valuable public company in the world to conduct business in the second-largest economy in the world.
The price of Apple (AAPL) fell the most on Wednesday in over a month. The company 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 company’s biggest international market is China, where sales last year accounted for about a fifth of the company’s overall revenue. Despite the fact that Apple does not break down iPhone sales by nation, analysts at the research firm TechInsights believe that China sold more iPhones than the US did in the most recent quarter. The majority of Apple’s iPhones are made in Chinese factories as well.
The Wall Street Journal reported on Wednesday that managers had been informing employees of the ban via chat groups or meetings that iPhone use for central government officials had been banned in China.
Bloomberg reported on Thursday that these bans had been extended to state-backed businesses, such as energy giant PetroChina, which employ millions of people and dominate large portions of the Chinese economy.
In a note published on Thursday, analysts at Bank of America noted that the potential iPhone ban coincides with the launch of Huawei’s latest high-end flagship device. Analysts described the timing as “interestin”.
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 around American restrictions on semiconductor exports to produce the new chip.
The Nasdaq Composite fell by about 0.9 percent on Thursday, and the semiconductor sector fell by more than 2 percent as a result of the news, which also caused a decline in tech companies.
Source-CNN
