Apple experienced a significant setback on Wall Street today as its shares dropped by nearly 4%, instigating a broader selloff in the technology sector. This abrupt plunge came on the heels of reports suggesting that China has extended its restrictions on iPhone usage within the country, potentially inflicting a staggering financial loss of approximately $100 billion in market value upon Apple, the world’s most valuable company. The sharp downturn represents Apple’s most severe single-day decline in over a month, following a troubling trend from Wednesday. Companies closely linked to China, such as Broadcom, Qualcomm, and Texas Instruments, also suffered losses ranging from 1.4% to 4.7%. Furthermore, Apple’s adverse performance significantly impacted the three primary U.S. stock indexes.
Sources indicate that China has recently instructed employees at select central government agencies to refrain from using Apple mobile devices during work hours. This move has intensified concerns surrounding the escalating tensions between the United States and China, with the former imposing restrictions on the latter’s access to critical technologies, including cutting-edge semiconductor chips. Beijing is actively striving to reduce its reliance on American technology companies and has imposed constraints on shipments from U.S. firms, such as Boeing.
Wall Street analysts have voiced their opinions, emphasizing that these Chinese restrictions on iPhones underscore the vulnerability of U.S. corporations, even if they possess a substantial presence in the world’s second-largest economy. Apple has already been grappling with declining iPhone sales, with China serving as its sole saving grace amidst a disappointing quarterly report last month.
Analysts further caution that the Huawei Mate 60 Pro smartphone may pose a formidable threat, as it relies on advanced chips manufactured by Chinese contract chipmaker SMIC, which has been subject to U.S. sanctions. These sanctions could potentially enable Huawei to boost its shipments and regain market share, posing a direct challenge to Apple’s dominance.
Fortunately for Apple, a ray of hope shines on the horizon with the impending launch event for the highly anticipated ‘iPhone 15’ scheduled for next week. The company is also gearing up for the release of new smartwatches. These upcoming product launches may rejuvenate demand and possibly alleviate some of the recent woes.
The limitations imposed by China on iPhones have the potential to lead to a staggering $100 billion loss in market value for Apple. Despite this, the wider impact of these sanctions on Apple’s financial standing and stock performance is unclear. Both market analysts and investors will be keeping a close watch on the situation as it develops, recognizing the critical role Apple holds in worldwide technology markets and its intricate ties with China’s expansive consumer base.
Source: Reuters
