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Apple lost $200 billion in valuation in just 2 days after China banned government employees from using iPhones

Republished By Plato
Republished By Plato

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The US sanctions on China’s semiconductors have backfired and are beginning to have a boomerang effect on American companies operating in China. The first casualty of the sanctions is iPhone giant Apple.

According to a report from CNBC, Apple’s stock dropped over 3% on Thursday, following a 4% decline the previous day, following multiple reports that Chinese government employees will no longer be allowed to use iPhones in their workplace.

The Wall Street Journal reported on Wednesday that China has ordered officials at the central government agencies not to bring iPhones into the office or use them for work. These restrictions mark Beijing’s latest move in its efforts to decrease dependence on foreign technology and insulate itself from future US sanctions.

Bloomberg News also reported on Thursday that the ban could spread to other state companies and government-backed agencies. While the extent of these bans remains unclear, it’s worth noting that China is Apple’s third-largest market, contributing to 18% of its total revenue last year.

Bernstein analyst Toni Sacconaghi wrote in a Thursday note that a ban on government employees might lead to a potential 5% reduction in iPhone sales in China. However, the more significant concern for Apple would be if these bans encourage everyday citizens to opt for Chinese-made electronics instead. Sacconaghi suggests that limited iPhone usage among government workers could have a ripple effect, influencing sales among consumers and contributing to China’s broader push for domestic technology adoption.

“Perhaps more importantly, restricted use of iPhones among government employees could negatively impact sales among consumers (related family members; general populace) and could be part of a broader move by the Chinese government to promote usage of domestic technology,” Sacconaghi wrote.

New competition for iPhone in China

Meanwhile, China’s phone giant Huawei recently launched a 5G Mate 60 Pro smartphone, a major breakthrough for China’s chip sector. Calling it a “blow to US sanctions,” Bloomberg reported that Huawei’s Mate 60 Pro is powered by SMIC’s 7nm chips, based on an analysis that TechInsights conducted for Bloomberg News. This is also the first time that SMIC has used its most advanced 7nm technology to manufacture a chip, and it is a sign that the Chinese government is making progress in its efforts to build a domestic chip ecosystem.

The teardown of the Mate 60 Pro, which was conducted by TechInsights for Bloomberg News, found that the Kirin 9000s chip is a 12-core processor with a top clock speed of 2.62 gigahertz. It also includes a new AI engine that is said to be 20% more powerful than the previous generation.

The use of a domestically made chip in the Mate 60 Pro is a significant milestone for Huawei, which was forced to stop using US-made chips in 2019 due to sanctions imposed by the Trump administration. Huawei has been working to develop its own chip ecosystem, and the Kirin 9000s is a major step forward in that effort.

The development of the Kirin 9000s is also a sign of the growing maturity of the Chinese chip industry. SMIC is one of the leading chipmakers in the world, and its 7nm technology is on par with the best that is available in the United States. The Chinese government’s investment in the chip industry is paying off, and it is likely that we will see more domestically made chips in Chinese products in the years to come.

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