On Thursday, Apple Inc. experienced a 2.9% decline in its stock value amid concerning reports regarding China’s plans to expand its ban on the use of iPhones to encompass government-affiliated agencies and companies. Investors are increasingly apprehensive about the world’s most valuable publicly traded company’s prospects in the second-largest global economy.
Apple (AAPL) registered its most substantial daily decrease in over a month on Wednesday, shedding approximately $200 billion in market capitalization within just two days. Currently, its stock is the poorest performer within the Dow Jones Industrial Average.
These newly proposed bans raise significant concerns for Apple. China stands as the largest foreign market for Apple’s range of products, with Chinese sales accounting for roughly a fifth of the company’s total revenue last year. Although Apple does not disclose specific iPhone sales figures by country, analysts at the research firm TechInsights estimate that China surpassed the United States in iPhone sales last quarter. Additionally, a majority of Apple’s iPhones are manufactured in Chinese factories.
Brandon Nispel, an analyst at KeyBanc Capital, pointed out that Apple, headquartered in Cupertino, California, plays a substantial role in Beijing’s economy. Historically, the company has been perceived as relatively secure in China, enjoying relative immunity from government restrictions. However, these recent reports of bans have raised the question of whether the Chinese government is altering its stance.
The Wall Street Journal reported on Wednesday that China had prohibited the use of iPhones for central government officials and that managers had been communicating the ban to their staff through chat groups or meetings. Subsequently, Bloomberg reported on Thursday that these bans had extended to state-backed enterprises, including the energy giant PetroChina, which employs millions of workers and wields significant influence in the Chinese economy.