Apple extends drop after reported China ban on iPhone use by government officials

September 08, 2023 12:22 AM AEST | By Investing

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Apple extends drop after reported China ban on iPhone use by government officials — Image source: Kalkine Media

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Investing.com -- Shares in Apple (NASDAQ:AAPL) fell in early U.S. trading on Thursday, as a decline in the stock stretched into a second straight day following a report that China had banned government officials from using the tech giant's iPhone and other foreign-branded devices for work.

Citing unnamed people familiar with the matter, the Wall Street Journal said on Wednesday that the order, which also prohibits government workers from bringing these smartphones into the office, had been handed down in recent weeks. It was not immediately clear how widely the directives were being distributed, the WSJ said.

Traders seemingly took the report as a signal that China may be willing to reduce its reliance on American companies in its bid to boost domestic tech players. This could prove to be a blow to Apple's Chinese operations, which generate almost a fifth of the company's total revenue.

Analysts at Bank of America (NYSE:BAC) warned in a note to clients that China's ban could have a "5 million to 10 million unit headwind" on iPhone shipments. China currently accounts for roughly 40M to 50M iPhone units for Apple, they added.

Meanwhile, Apple rival Huawei's new mobile gadget capable of ultrafast data connectivity may also weigh on iPhone sales in China, analysts at Oppenheimer flagged.

“The government ban and the new Huawei phone will be material events for the iPhone,” the Oppenheimer analysts said. “The two combined will drive more Android users to upgrade to the Huawei, or iPhone users going back to Huawei.”

At 10:10 ET (14:10 GMT), California-based Apple's stock price had slipped by 3.6% to $176.30. The shares, which were exchanging hands at $189.70 when markets closed on Tuesday, were on track to wipe out $194 billion in market value in only two days.

This article first appeared in Investing.com

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