Imagine this: You’re a company, and your second-biggest market, which generates almost a fifth of your revenue, suddenly enacts a partial ban on your products.
Apple is currently living out that nightmare.
What happened: Apple shares fell 6.52% over the past two days—erasing as much ~US$212 billion in market cap and dragging down tech stocks in the process—after news broke that China banned employees at government agencies and state-owned companies from using iPhones or other foreign-branded devices.
- Apple suppliers also took a hit, along with the entire tech sector, as fears about China carrying out future bans rattled the market.
Why it’s happening: As we mention pretty much every day, China and the West have a frosty relationship rn. The ban is another result of this geopolitical tête-à-tête as China looks to promote tech from state-backed companies and retaliate against US-led chip bans and similar policies enacted against Huawei and TikTok.
- The ban comes at a conspicuous time, too. Huawei just unveiled its new smartphone, which is powered by a world-class chip created by the country’s top chipmaker.
Why it matters: If Apple—a company that is arguably more deeply interconnected with the Chinese economy than any other Western brand—isn’t safe from escalating tensions between the West and China, then no Western company is.—QH