In a significant move, China has imposed a ban on the use of iPhones by central government officials, according to reports from unnamed sources familiar with the matter. The news sent shockwaves through the market, causing Apple shares to plummet by 3.6%, marking the company’s largest daily drop in a month, with the stock closing at $182.91 in New York. Prior to this, Apple had enjoyed a 46% increase in its stock value this year.
The Wall Street Journal reports that managers have been relaying the ban to their staff through various means, including chat groups and meetings. Despite attempts to seek clarification from both China’s Ministry of Foreign Affairs and Apple, no official response has been received.
Remarkably, sources indicate that Chinese officials had already been informally steering clear of iPhones for some time, even before the pandemic, though there was no formal policy in place. Instead, these officials have increasingly favored smartphones manufactured by domestic companies, most notably Huawei.
This development follows a broader trend of tensions between China and the United States, which has seen restrictions placed on various Chinese tech companies. In a parallel move, some Chinese government ministries previously banned Teslas from their premises due to security concerns.
Apple’s CEO, Tim Cook, had previously made a high-profile visit to China, highlighting the country’s importance as both a market and a manufacturing hub, contributing approximately 19% of the company’s total revenue.
This iPhone ban for government officials may be viewed as a retaliatory measure in response to actions taken by the United States against Chinese technology companies. It has the potential to impact not only Apple but also other foreign brands with established operations in China.
In recent years, Huawei and ZTE have faced ongoing restrictions imposed by the U.S., with the Biden administration going so far as to halt approvals of new telecommunications equipment from these companies due to perceived national security risks.
This ban on iPhones could signal that China is unwilling to exempt any U.S. company from its efforts to reduce reliance on American technologies. China represents one of Apple’s most significant markets, generating nearly a fifth of its total revenue.
While the immediate impact on earnings remains uncertain, given the iPhone’s popularity in China, analysts believe that this move will serve as a stark reminder of the complex relationship between international companies and China, especially amid ongoing geopolitical challenges.
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