After China banned the use of foreign technology that also included iPhones amongst government employees, it resulted in Apple’s shares dropping by 3.6 percent. Sadly, the aftermath will reportedly cause the company’s market value to be wiped out by $212 billion.
Apple’s shares fell by as much as 5.1 percent, bringing its two-day drop to 7.1 percent
An expanded ban by China on the use of iPhones has triggered some deleterious effects for Apple in terms of market value. The company is all set to unveil its newest iPhone 15 lineup next week, but the latest ban is set to wipe out around $212 billion from the company’s market value. According to Bloomberg, Apple’s shares fell by as much as 5.1 percent, bringing its two-day drop to 7.1 percent.
China is one of Apple’s biggest markets, with an earlier estimation stating that approximately one-fifth of the firm’s revenue is generated through this single region. China also happens to be the largest smartphone market by volume, so it is no surprise that this country holds great importance for Apple. For those that do not know, Foxconn, the Cupertino company’s biggest assembling partner, also has a massive factory located in the same regions, and it distributes the majority of iPhone shipments to various markets.
In short, Apple has little choice but to bear the ban, but it should be noted that the decision taken by China only affects government agency employees and the workplace. Outside of the workplace, it is possible that those employees switch to iPhones as their daily drivers. According to various reports, the Chinese government has banned the use of iPhones as it wants to reduce its reliance on U.S.-based technology.
With tensions between the U.S. and China rising and trade sanctions placed on various companies like Huawei and ZTE, the ban appears to be a form of retaliation, though unnamed sources state that the primary goal of the ban is to beef up cybersecurity and prevent the leakage of sensitive information. Apple has always marketed its iPhones with a focus on privacy, but it appears that the Chinese authorities do not wish to take any chances.
Apple can recover its market value with the iPhone 15 launch, but diversifying production out of China would probably be its long-term goal. Also, with the latest decision undertaken by the government, the company would have greater motivation to pursue its ambition of reducing dependency, but that will take years to reach fruition.
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