China’s plan to expand its ban on the use of iPhones beyond government departments to include government-backed agencies and state companies has had a major impact on Apple Inc (NASDAQ:AAPL)’s share price.
$US190 billion ($298 billion) of market value has been taken from the tech giant in just two days.
Shares closed down 2.9% on Thursday to $US177.56, bringing its two-day slump to about 6.5%.
Given Apple’s standing as the largest component in major US equity indices, its performance has wider ramifications.
Wider ramifications as Apple’s over reliance on China is laid bare
China's ongoing real estate crisis and economic downturn have raised concerns over demand for a range of products, including commodities and consumer electronics.
As such, Apple, which considers China its most significant foreign market, faces increased scrutiny.
Edward Moya, a senior market analyst at OANDA, said, “The Nasdaq is sinking as one bad Apple spoils a bunch of mega-cap tech stocks Apple's growth story is heavily reliant on China. An intensified Beijing crackdown could pose a significant problem for other mega-cap tech firms reliant on China."
The Nasdaq 100 Index fell 0.7%, and the Philadelphia Semiconductor Index, home to several Apple suppliers, declined by 2%.
Bank of America (NYSE:BAC) analyst Wamsi Mohan pointed out the timing coincides with Huawei's new high-end 5G smartphone launch. TechInsights' analysis for Bloomberg News shows that Huawei’s Mate 60 Pro employs 7-nanometre (nm) chips from Semiconductor Manufacturing International, signalling China’s efforts to circumvent US constraints.
If Beijing imposes a ban, it may not only impact Apple but other US technology companies with operations in China. However, Daniel Ives from Wedbush Securities downplayed the crisis, stating the potential ban could affect fewer than 500,000 of an anticipated 45 million iPhones to be sold in China in the coming year.
The repercussions of China's economic challenges are manifesting in market responses, affecting various sectors from technology to commodities, with uncertainties remaining high for foreign companies operating in China.