In a move that further intensifies the already strained relations between China and the United States, the Chinese government has expanded its ban on non-Chinese smartphones, specifically targeting iPhones and Samsung Galaxy devices. This ban, initially implemented in select states, has now spread across eight provinces, including prosperous coastal regions, raising concerns about its impact on the global smartphone market.

Motivated by a desire to reduce dependence on US-based technologies, the Chinese government has directed state-affiliated firms and government offices to prohibit the use of non-Chinese smartphones among their employees. The ban encompasses widely popular devices like iPhones and Samsung Galaxy phones, with employees advised against bringing these devices to workplaces.

The ban’s scope has evolved from a few states to a nationwide effort over the past decade, showcasing China’s long-term strategy to promote local technologies and semiconductor chip manufacturing. While the Chinese government officially denies an outright ban on iPhones and Samsung phones, reports suggest varying levels of enforcement across different government agencies, with employees instructed to opt for local brands instead.

This move is expected to have a substantial impact on the global smartphone market, particularly affecting Apple and Samsung. Anticipated reductions in iPhone and Samsung phone sales in China, the world’s largest smartphone market, have already led to a dip in Apple’s shares. Moreover, the ban has created a ripple effect, impacting the share prices of Apple’s suppliers, including LG Innotek and Minebea Mitsumi.

In response to the ban, smaller firms in lower-tier cities are reportedly issuing verbal directives to employees to cease using non-Chinese phones. This unofficial spread of the ban highlights the broader implications for foreign smartphone manufacturers operating in China.

While Apple has not provided an immediate response to the ban, market analysts predict a significant drop in iPhone sales, impacting Apple’s revenue in the coming months and years. In contrast, local Chinese firms like Huawei are poised to benefit from the ban, experiencing increased smartphone sales.

As the ban accelerates and more Chinese agencies and state-backed companies extend the prohibition to their staff, the global tech landscape faces ongoing challenges. China’s promotion of local software and semiconductor chip manufacturing reflects a broader trend of the nation reducing its reliance on foreign technology across various sectors, marking a paradigm shift in the global tech industry.

Related:

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• Chinese semiconductor firms turn to Malaysia for high-end Chip Assembly amid US sanctions

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Amidst escalating China-U.S. tensions and Huawei’s renewed competitive vigor, China’s Apple suppliers find themselves on shaky ground. The fallout began when Beijing issued a directive instructing central government employees to cease using iPhones at work, a move that triggered a chain reaction in the tech industry.

Tech giant Apple, suffered a jarring 6.4% nosedive in its stock price over just two days, causing a staggering $190 billion loss in market capitalization. This drastic slump was a direct result of China’s stern stance on iPhone usage within government circles, sparking concerns about Apple and its supplier companies’ future prospects.

The wider ramifications of this situation were felt in the broader Chinese stock market. The CSI 300 Index, which encompasses top Chinese companies, witnessed a 0.5% dip, concluding a week marked by a 1.4% loss. The Shanghai Composite Index dipped by 0.2%, while the Shenzhen Composite Index retreated by 0.4%.

The situation escalated to the extent that Hong Kong canceled trading for both stocks and derivatives after a black rainstorm warning was issued by the Observatory. This marked the second instance in the same month that adverse weather conditions disrupted the city’s financial markets.

Among the casualties in this turmoil were Apple’s prominent suppliers. Foxconn Industrial Internet saw a 0.6% drop in its shares, closing at 19.08 yuan. Luxshare Precision Industry slid by 2%, ending at 29.35 yuan. These declines were attributed to the Chinese government’s ban on iPhones for employees focusing on investment, trade, and international affairs.

Other suppliers, including battery producer Contemporary Amperex Technology (down 1.6% to 222.94 yuan), electric vehicle manufacturer BYD (down 1.8% to 244.05 yuan), and AI server maker Inspur Electronic (down 3.3% to 35.17 yuan), also bore the brunt of the fallout. Even liquor distiller Kweichow Moutai weakened by 1.1%, closing at 1,818.50 yuan, while peer Wuliangye lost 1.3%, ending at 160.96 yuan.

Adding further pressure to Apple’s predicament in one of its largest markets, Huawei unveiled two new smartphones: the foldable Mate X5 and the Mate 60 Pro+, which showcased resilience to U.S. sanctions and drew significant global attention.

In Taiwan, a key hub for Apple suppliers, Largan Precision, known for producing camera lenses, plummeted by over 4%, while contract chipmaker TSMC fell by 0.6% on Friday.

Luxshare Precision Industry, a manufacturer of connector cables for Apple devices, including iPhones and MacBooks, as well as AirPods, also experienced a 2% decline in its shares, partly attributed to Huawei’s recent product launch.

Analysts speculate that Huawei’s resurgence could be the initial step in its efforts to challenge Apple’s dominance. As the tech battle between giants intensifies, the future remains uncertain for Apple and its suppliers in the volatile Chinese market.

Related:

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• China bans iPhones for Government Officials, sending Apple shares tumbling

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