Apple Sales Hit Hard Following Chinese Ban on Apple Products

Following reports of a Chinese authority ban on iPhones in selected workplaces, Apple’s stock value has depreciated by over £160 billion in the space of two days. Beyond this, concerns about competition from Chinese-owned technology firms, and rising tensions between the US and China, have led to apprehension amongst investors. How important are these discussions in relation to Apple’s future?

The Ban

There has been no official public announcement by the Chinese government regarding the ban. Therefore, it remains unclear how far it will extend. Reports mention that the order will apply to workers of central government agencies, as well as some state-owned companies and other official government agencies.

It should be noted that this ban is not completely novel. IPhones were already banned in some agencies, and as such, this ban is only an expansion of pre-existing restrictions. China is rejecting companies like Apple in favour of its native technology manufacturers.

Concerns for Apple and its suppliers

The future of the world’s most valuable public company is debated as the economy responsible for the ban also amounts to nearly 20% of Apple’s total revenue. Accordingly, the confidence of investors in the company’s ability to return on their investments (ROI) has been undermined, leading to sales of Apple’s stocks. This includes reports of Dan Niles, from the Satori Fund, selling his shares in Apple. The decision of the portfolio manager has not been directly attributed to the ban but may be seen as a factor within his wider criticism of the inflated value of the company.

Apple has not been the only one affected. As Apple sales decrease, so does the demand for supply parts. Some of Apple’s suppliers have already suffered as a consequence of the decision. Qualcomm, Apple’s chip supplier, has seen its sales drop by nearly 7% in two days following the announcement.

It remains to be seen how this ban will affect the sales of the new iPhone 15, revealed on 12th September 2023.

The Bigger Picture

The ban and its consequences for Apple must be considered alongside other current affairs linked to the issue.

China’s move comes amidst rising tension with the US. This includes the USA’s recent decision to ban its companies from investing in China’s technology sector. At the same time, China has invested over $40 billion in its chip-making industry; to get ahead in the AI race.

At the same time, one of the most prominent Chinese phone makers, Huawei’s upcoming Mate 60 Pro Smartphone, may serve as a substitute for Apple’s product.

Conclusion

As Apple gets caught up in US-Chinese tensions, we can expect to see a serious change in its future value, as well as other US tech companies.

By Adham Shaker