China will now forbid iPhones from firms supported by the government

The decision by China to extend the iPhone ban from sensitive government departments to state-owned businesses and government-backed organizations foreshadows greater difficulties for Apple in its biggest overseas market and base of operations worldwide.

This action puts Apple’s position in the Chinese market in danger as part of Beijing’s continued attempts to lessen reliance on foreign technology and American software and circuitry. A report claims that a number of organizations, including central government authorities, have already told their employees not to bring iPhones to work, matching an earlier Wall Street Journal article.

Beijing also plans to apply this ban to a large number of state-owned companies and organizations under its control. Although there is currently no formal or written injunction, it is anticipated that the restrictions on personal devices will vary in severities among various state enterprises and organizations.

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This prospective ban is significant because China wants to reduce the use of foreign technology in delicate areas. China is a significant market for Apple, contributing around 20% of its income, and it is the main location for the production of iPhones, with vast facilities there employing millions of Chinese employees. However, if the prohibition is put into effect, it might weaken Apple’s position in the market and mess up its supply chain.

The company’s shares fell by 3.6%, the most since August 4, the report claims, as investors responded unfavorably to the possibility of China turning against Apple.

Apple has retained its appeal in China, with iPhones being top sellers in both the public and private sectors, despite escalating rivalry tensions between the two countries in the technological sector.

iPhone ban: The tech industry’s tense US-China relationship

The iPhone ban comes as China works to create homegrown technology that can compete with or outperform American ingenuity. A Huawei smartphone with a cutting-edge indigenous processor was unveiled last week and received positive press on both sides of the Pacific.

Beijing’s relentless efforts to oust foreign technology from critical industries were on display in May 2022, when Beijing ordered the replacement of foreign-branded personal computers with indigenous alternatives in central government institutions and state-backed companies within two years.

The Biden administration has also worked to limit American shipments of cutting-edge semiconductor machinery to China. China’s leading chipmaker, Semiconductor Manufacturing International Corp., has come under fire for supplying parts to Huawei, a business that the US has blacklisted.

Apple still strongly relies on China, both as a manufacturing partner and as a market for its products, despite the tense relations between the US and China. Tim Cook, the CEO, has highlighted the mutually beneficial nature of this connection.

Apple’s latest quarter’s performance was significantly impacted by China, which helped counteract an overall weak period. A report claims that Apple’s sales for the third quarter of its fiscal year, which concluded on July 1, decreased by 1.4% to $81.8 billion but its earnings per share increased by 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.

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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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