Apple Shares Rebound After $200 Billion Wiped Out Over Fears of China iPhone Ban

The Apple logo is displayed on the exterior of an Apple Store in San Francisco on Aug. 4, 2023. (Justin Sullivan/Getty Images)

Apple shares rebounded at the end of the trading week following a two-session skid that saw the tech titan lose about $200 billion in valuation.

The decline was driven by reports that China would prohibit government employees from using iPhones as their work phones.

The world’s largest company by market cap ticked up about 0.4 percent during the Sept. 8 regular trading session to around $178 per share. The stock fell about 6 percent for the week.

Apple’s suppliers also took a hit last week.

Shares of Largan Precision, a Taiwanese camera lens maker, slipped by about 4 percent. Chip contractor Taiwan Semiconductor Manufacturing stock fell almost 5 percent last week.

Investors were spooked when The Wall Street Journal reported on Sept. 6 that China banned government officials from using Apple iPhones for work as part of broader efforts to decrease the nation’s dependence on foreign technology and bolster cybersecurity amid growing geopolitical tensions.

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The decision mirrored last year’s measure by the U.S. government against Chinese tech firms and applications such as Huawei, TikTok, and ZTE.

President Joe Biden and his administration are still mulling over a plan to prevent domestic suppliers from working with Huawei.

But Beijing’s recent actions against Apple might have more significant financial consequences.

A man outside a Huawei retail store in Beijing on Dec. 30, 2022. (AP-Ng Han Guan/The Canadian Press)

The tech giant generates about a fifth of its revenue from China, as the world’s second-largest economy functions as a critical consumer market and manufacturing hub for Apple. It’s estimated that Apple will earn $407 billion in the fiscal year ending in September. The ban could also wipe out about $280 million in profit.

Dan Ives, a tech analyst at Wedbush Securities, anticipates an Apple–Huawei hybrid approach by consumers moving forward.

“Seen bearishness and Black Swan ’this could be the moment' around Apple/China worries for the last decade and this time no different in my view,” Mr. Ives wrote on X, formerly known as Twitter. “Not saying it’s roses/champagne backdrop in China but Huawei phone will be work phone for some govt workers-iPhone the everyday one.”

Dan Niles, a portfolio manager at Satori Fund, revealed to CNBC on Sept. 7 that he sold his stake in the company and is now shorting Apple because of the potential ban and competition boost from Huawei.

The ban would not “move the needle in terms of hurting them too much,” said Ken Mahoney, CEO of Mahoney Asset Management.

“It seems that the greater fear is that the ban may spread further than just government employees to other companies or entities and even Chinese citizens,” he told The Epoch Times. “We feel that this outcome is doubtful, however, and this is just a move in the tech chess match cold war between the U.S. and China after the Biden admin signed an executive order to impose blocks and regulations on tech investments in China.”

An Issue for China

So far, the White House has been quiet on the issue.

During a press gaggle en route to Ramstein Air Base in Germany, national security adviser Jake Sullivan told reporters that this was an issue for the Chinese regime, not the administration.

“But on the particular question of Apple phones, I’ve seen the reports,” Mr. Sullivan said. “I think this is more of a question for the [People’s Republic of China]—what’s motivating them, what the scope of this will be, and what they think the net effect of that will be—than it is a question for the U.S. government.”

White House national security adviser Jake Sullivan departs from a briefing for U.S. senators at the U.S. Capitol in Washington on Sept. 7, 2023. (Anna Moneymaker/Getty Images)

He confirmed that he doesn’t intend to have any near-term conversations with Chinese officials on this matter and will instead “see how things play out.”

At a G20 summit press briefing, Treasury Secretary Janet Yellen didn’t comment on China’s reported Apple ban, saying that she wasn’t prepared to provide the media with “an answer on that.”

In the middle of the business and geopolitical drama, Huawei unveiled new smartphones—the foldable Mate X5 and the Mate 60 Pro+—ahead of Sept. 12’s launch event of the iPhone 15. The advanced smartphone chip technology captured the U.S. government’s attention because it prompted concerns that its sanctions have had little effect.

That caused the Commerce Department to start an official investigation into Huawei’s made-in-China seven-nanometer chip that China’s Semiconductor Manufacturing International Corp. manufactured. This firm was blacklisted by the U.S. government in December 2020 and was prohibited from accessing the country’s technology.

Huawei is presently a global leader in 5G technology and smartphones, and there are fears that the company threatens national security because it’s beholden to Beijing.

As of June 2022, Huawei controls more than 3,700 5G patent families, according to data compiled by the Council on Foreign Relations. By comparison, Apple owns a little more than 500.

Huawei is presently worth about $200 billion. Apple’s value is roughly $2.7 trillion.

Year-to-date, Apple shares have rallied 42 percent.

Officials at the Department of Commerce didn’t respond by press time to a request by The Epoch Times for comment.