Apple $AAPL Pay the Price for US Anti-China Politics

Apple shares fell sharply for a second straight session Thursday following reports of significant Chinese restrictions on iPhones at government offices and state-backed entities.

Shares of the world's biggest publicly-traded company were down 2.8 percent at $177.79 in late morning trading.

Shares fell 3.6 percent on Wednesday after a Wall Street Journal report that China barred the use of Apple smartphones in central government agencies.

That was followed Thursday by a Bloomberg News story that China planned to expand the ban to government-backed agencies and state companies, broadening the effect of the policy in a centrally-planned economy.

Apple and Chinese officials have not responded to requests for comment from AFP.

The move comes amid intensifying tensions between Beijing and Washington.

The Bloomberg story said a release last week of a Huawei smartphone employing a made-in-China processor was hailed in Chinese state media as a "triumph" in the wake of US sanctions.

Apple reported $15.8 billion in revenues from China in the most recent quarter, nearly 20 percent of total revenues. Executives pointed to the uptick in China sales in a period when overall sales fell.

"The US-China trade war and other political tensions are damaging US companies in China. These companies are facing higher tariffs, increased scrutiny from the Chinese government, and a more challenging business environment. This is making it difficult for US companies to compete in China, and it is costing them jobs and revenue."

Shayne Heffernan

Briefing.com analyst Patrick O'Hare said the Apple situation has implications for other tech companies.

"The worry for the market is that, if China purposely chooses to make business difficult for a company like Apple, which has a good and important working relationship in China, then it can do so for a lot of other US companies doing business in China," O'Hare said.

But Wedbush Securities analyst Dan Ives estimated that a Chinese government ban would affect less than 500,000 iPhones of roughly 45 million projected to be sold in the country in the next year.

"We believe despite the loud noise Apple has seen massive share gains in China smartphone market," Ives said, adding that rising sales give Apple "incremental momentum on this front."

China is one of the most important markets for Apple. In 2021, it was Apple's second-largest market, accounting for 20% of its global revenue.

There are a few reasons why China is so important to Apple. First, it is a large and growing market. China has a population of over 1.4 billion people, and its economy is growing rapidly. This means that there is a large potential market for Apple products in China.

Second, Chinese consumers are increasingly affluent. They are more willing to spend money on luxury goods, such as Apple products. In fact, China is now the world's largest luxury goods market.

Third, Apple has a strong brand presence in China. The company has been able to build a loyal customer base in China, thanks to its innovative products and its strong marketing campaigns that is now at risk of vanishing.

Apple is building a new manufacturing plant in China, and it is also expanding its retail presence in the country. The company is also investing in research and development in China.

Apple believes that China is a key market for its future growth. The company now faces an uncertain future in China as America ramps up it's Anti-China rhetoric.

Here are some specific reasons why China is important to Apple:

• Large and growing market: China has a population of over 1.4 billion people, and its economy is growing rapidly. This means that there is a large potential market for Apple products in China.

• Affluent consumers: Chinese consumers are increasingly affluent. They are more willing to spend money on luxury goods, such as Apple products. In fact, China is now the world's largest luxury goods market.

• Strong brand presence: Apple has a strong brand presence in China. The company has been able to build a loyal customer base in China, thanks to its innovative products and its strong marketing campaigns.

• Investments: Apple is investing heavily in China. The company is building a new manufacturing plant in China, and it was also expanding its retail presence in the country. The company is also investing in research and development in China.

Shayne Heffernan