Apple suffers $200 billion loss due to China’s complete ban on the use of iPhones

September 8, 2023 Samson Ayodeji

Apple, the maker of the iPhone, just saw a sharp decline in the value of its stock, shedding a startling $200 billion in only the last two days. The reduction was partially attributable to China’s decision to ban the use of iPhones by employees of its government.

Following news of the Chinese ban on Thursday, Apple’s shares decreased by 3.4%. One of the poorest Dow Jones Industrial Average performers, this dramatic dip was the company’s biggest daily drop in more than a month.

Apple’s commercial influence and China’s prohibition

According to research, China is Apple’s biggest international market, accounting for almost one-fifth of the company’s whole revenue in 2016. Therefore, it is important that the government is prohibited from using iPhones.

This is taking into account Apple’s sway over the Chinese smartphone industry and its function as a sizable employment thanks to its contract makers and suppliers there. A $200 billion revenue loss is anticipated as a result of the iPhone ban because the majority of Apple products are made in China.

National security and economic concerns played a role in China’s decision to forbid state-owned businesses and government entities from adopting iPhones. Beijing wants to rely less on foreign technology, particularly American electronics and software.

This is done to stop critical information from leaving the country’s borders. China has implemented this ban in an effort to support its domestic tech industry and protect its interests.

Effects on Apple’s market share and China’s choice

Beijing’s proposal to prohibit the sale of iPhones to state-owned businesses and agencies poses serious problems for Apple in its biggest international market.

China wants to build its own technology industry and lessen its sensitivity to outside influences by lowering its reliance on foreign technologies. This action threatens to disrupt Apple’s large supply chain and jeopardizes the company’s position in the Chinese market.

Apple may suffer long-term repercussions as a result of China’s efforts to reduce the use of foreign technology in delicate settings. A significant portion of the company’s sales, or about 20% of its profitability, comes from the Chinese market.

Furthermore, with vast facilities that employ millions of Chinese employees, China is the main place for the production of iPhones. Apple’s market share might decline if the restriction is strictly followed, and its supply chain would experience difficulties.

A study claims that China significantly impacted Apple’s fourth-quarter profits, offsetting a usually slow time. Apple’s third fiscal quarter ended on July 1 with revenues down 1.4% to $81.8 billion and an increase in earnings per share of 5% to $1.26.

Analyst predictions for those figures were $81.69 billion and $1.19 per share. The robust sales in the services sector, which includes Apple TV+, and the 8% year-over-year growth in sales in China made up for the reduced iPhone sales.

In preparation for the holiday quarter, which is typically its busiest sales time of the year, the company is slated to reveal its newest iPhones next week.

Author

Samson Ayodeji

I am literally obsessed with technology. I love writing about the latest news in technology in different markets, segments and sectors across the world.

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