Apple shares fell 2.9% on Thursday after reports that China was considering extending an iPhone ban to government-backed agencies and companies.
Investors are worried about the viability of the world's most valuable public company in the world's second-largest economy.
Apple (AAPL) on Wednesday posted its biggest daily drop in more than a month. The company lost about $200 billion in two days, and its stock is currently the worst performer on the Dow Jones Industrial Average.
The bans could be a worrisome sign for Apple. China is the largest overseas market for the company's products, and sales in China accounted for about a fifth of the company's total revenue last year. Apple doesn't disclose iPhone sales by country, but analysts at research firm TechInsights estimate that iPhone sales in China outstripped the US in the last quarter. Apple also makes the majority of iPhones at factories in China.
KeyBanc Capital analyst Brandon Nispel wrote on Wednesday that Apple, based in Cupertino, California, also plays an important role in Beijing's economy. For this reason, the company "has always been considered relatively immune to government restrictions in China". He wrote: “Is the government changing its mind? These reported bans raise an important question.”
On Wednesday, the Wall Street Journal reported that China had banned central government officials from using iPhones, and that the officials informed employees of the ban through focus groups or meetings.
On Thursday, Bloomberg reported that those bans were extended to state-backed companies, including energy giant PetroChina, which employs millions of workers and controls much of the economy. Chinese economy.
Bank of America analysts wrote in a note Thursday that the potential iPhone ban follows a new high-end smartphone launched by Chinese manufacturer Huawei. The timing is "interesting," according to analysts.
The US government on Tuesday announced that it is investigating the new smartphone. National Security Adviser Jake Sullivan said in a White House press conference that the United States needs “more accurate information about his character and makeup” to determine whether the parties circumvented the restrictions. The United States for semiconductor exports to create new chips or not.