China has intensified its restrictions on the use of Apple iPhones within government offices and state-backed entities, contributing to a decline in Apple’s stock value. Following a report from the Wall Street Journal about China’s ban on iPhones in central government agencies, Apple shares dropped by 2.8 percent to $177.79 in late morning trading, marking a continued decrease after a 3.6 percent fall on Wednesday.
Bloomberg News later reported plans to extend this ban to include government-backed agencies and state companies, significantly widening the scope of this policy in China’s centrally-planned economy. This development aligns with the ongoing trend in China of prioritizing domestic technology over foreign products amidst escalating tensions with the United States.
Sources familiar with the matter, who chose to remain anonymous due to the sensitivity of the issue, informed Reuters that staff in several ministries and government bodies were instructed to avoid using iPhones at work. However, specific details regarding the enforcement and deadline of this ban are not clear.
Apple’s significant market in China, accounting for nearly a fifth of its revenue, is facing challenges due to these restrictions. The company, along with its suppliers, has extensive operations and a large workforce in China. Apple CEO Tim Cook emphasized the company’s longstanding relationship with China during a visit to Beijing in March.
Analysts predict that these extended restrictions could hinder Apple’s sales growth in China. D A Davidson analyst Tom Forte expressed concerns that the limitations could pose additional challenges for Apple, especially considering the existing impact of China’s macroeconomic environment on the company’s revenues.
Patrick O’Hare of Briefing.com highlighted the broader implications for other tech companies operating in China, suggesting that if China can make operations difficult for a company like Apple, it could do the same for numerous other U.S. businesses in the country.
US Representative Mike Gallagher, chair of the House panel on China, described the move as “textbook Chinese Communist Party behavior.” He warned American tech companies seeking closer ties with the CCP to recognize the potential risks involved.
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