- Apple Inc. shares witnessed a nearly 3% decline on Thursday, erasing almost $200 billion in market value over just two days. This drop is attributed to China's plans to extend its ban on the use of iPhones to government-backed agencies and state companies. In the past two days, shares of the Cupertino, California-based company experienced a 6.4% decline, marking the most significant two-day slump in a month. Apple holds a prominent position in major US equity indexes, contributing to a broader market downturn influenced in part by various challenges in China.
- China, the world's second-largest economy, is grappling with an extended crisis in its real estate sector, which poses a threat to demand for various goods, including consumer electronics and commodities. Apple considers China its largest foreign market and a crucial global production hub. Adding to Apple's woes are rising US Treasury yields, driven by concerns that the Federal Reserve may need to intensify its efforts to combat inflation, given the resilience of the US economy.
Why it matters
The timing of the potential iPhone ban is intriguing, coming shortly after the launch of Huawei Technologies Co.'s high-end 5G-capable smartphone. Analyts predict that if Beijing proceeds with the ban, it could have far-reaching implications, affecting multiple US technology companies reliant on sales and production in China. Nonetheless, other bullish analysts, such as Wedbush Securities' Daniel Ives, believe that the impact of an iPhone ban may be overstated, affecting a relatively small fraction of the iPhones expected to be sold in China over the next year.