Apple witnessed a drop of almost 4% on Thursday, causing a domino effect on US stocks. This sudden drop comes after reports suggesting an expanded restriction on iPhone use by Chinese government officials, a move that significantly affects one of Apple’s crucial markets.
Based on pre-market business trends, the world’s most valuable company is expected to face a reduction in its market value of more than $100 billion. This slowdown marks the steepest single-day drop in more than a month, a phenomenon observed just the day before.
The broader implications of this decline are evident in companies linked to Apple’s supply chain, as well as those highly exposed to the Chinese market. Names like Broadcom, Qualcomm and Texas Instruments saw declines ranging from 1.2% to 2.8%. The impact of the Apple crisis also resonated with the three major US stock indices.
Previous reports from Reuters indicated that Beijing had issued directives to employees of select central government agencies, urging them to stop using Apple devices for official work.
This latest development exacerbates existing concerns about the financial repercussions of rising tensions between the United States and China.
In recent years, the United States has sought to limit China’s access to critical technologies, particularly cutting-edge chips. In parallel, Beijing has worked to reduce its dependence on American technology and restrict shipments from American companies, including aerospace giant Boeing.
Wall Street analysts have stressed that the restrictions on iPhones underscore the vulnerability of even a company with deep ties to the Chinese government and a significant presence in the world’s second-largest economy to rising tensions between Sino-US relations.
Beijing’s actions also come at a critical time for Apple, as the company faces a decline in iPhone sales. In particular, China had emerged as a bright spot in an otherwise disappointing quarterly earnings report released last month.
Tom Forte, an analyst at DA Davidson, highlighted: “The restrictions have the potential to slow Apple’s sales growth in China. This could pose an additional challenge for the company.”
Some analysts have also expressed concern about a possible drop in sales due to the recent launch of the Mate 60 Pro smartphone by Huawei. This device is powered by an advanced chip manufactured by Chinese chipmaker SMIC, marking an important milestone for the two entities, which have been affected by US sanctions.
The sanctions have had a significant impact on Huawei’s sales within its home country, giving Apple the opportunity to capture some of the market from the national favorite.
Analysts at Bofa Global Research noted: “If Huawei has the ability to supply and scale its homegrown Kirin 9000S (chips), we see the Mate series phone as an opportunity for Huawei to increase its shipments and regain its market share.”
However, Apple could see a surge in demand following an upcoming event where it is expected to unveil its iPhone 15 series, along with new smartwatches.
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