Apple experienced a sharp decline in its shares, plummeting nearly 4% on Thursday, triggering a ripple effect across the technology sector. This downturn follows reports indicating that China has expanded its prohibitions on the use of iPhones. The consequences could potentially result in a staggering financial setback of approximately $100 billion in market value for the world’s most esteemed company, Apple. This slump marks Apple’s most significant one-day drop in over a month, following a disappointing performance on Wednesday.
The market turmoil extended its reach, impacting key suppliers and companies heavily invested in the Chinese market. Entities like Broadcom, Qualcomm, and Texas Instruments witnessed declines ranging from 1.4% to 4.7%. The repercussions of Apple’s decline reverberated through the three primary U.S. stock indexes.
Recent reports reveal that Chinese authorities have instructed employees at select central government agencies in recent weeks to cease the use of Apple mobile devices while at work. This development heightens concerns amid the escalating tensions between the United States and China. The U.S. has taken a stance restricting China’s access to critical technologies, including cutting-edge semiconductor chips. Additionally, Beijing has actively sought to reduce its reliance on American technology and has imposed limitations on shipments from U.S. companies like Boeing.
Analysts on Wall Street have weighed in on the matter, emphasizing that the Chinese restrictions on iPhones underscore the vulnerability of any U.S. enterprise, irrespective of its substantial presence in the world’s second-largest economy. Apple has already grappled with a decline in iPhone sales, with China serving as its sole saving grace during a lackluster quarterly report last month.
In the meantime, industry experts have issued warnings regarding the potential threat posed by the Huawei Mate 60 Pro smartphone. This device employs advanced chips produced by Chinese contract chipmaker SMIC, which is presently under U.S. sanctions. This development may facilitate Huawei in ramping up its shipments and reclaiming lost market share.
Although the Chinese restrictions on iPhones could result in a financial setback of approximately $100 billion in market value for Apple, the company may anticipate a surge in demand following its forthcoming ‘iPhone 15’ launch event scheduled for next week, as well as the release of new smartwatches. The impact of these recent sanctions on the tech giant’s revenue and stock performance remains to be seen. Observers are closely monitoring the situation for any further developments.
Source: Reuters
