Apple’s Market Value Drops by Nearly $200 Billion Amid iPhone Restrictions in China
In just two days, Apple Inc. shares experienced a significant decline, potentially erasing $200 billion of market value, following China’s intention to extend the prohibition of iPhones to government-affiliated agencies and state-owned enterprises.
Shares of the Cupertino, California-based company fell as much as 5.1%, bringing the two-day decline to 6.8%. Apple is the biggest contributor to major U.S. stock indexes, fueling a broader sell-off driven in part by China’s woes.
The world’s second-largest economy has collapsed amid a prolonged crisis in its real estate market, threatening demand for everything from commodities to consumer electronics. The iPhone manufacturer considers China to be its largest foreign market and its global production base.
Adding to Apple’s woes are rising U.S. Treasury yields as bonds sell off the play that the Federal Reserve will be forced to step up its fight against inflation as the U.S. economy remains resilient.
The news has a wide impact on markets, with investors selling everything from chips, mega-cap technology to US-listed Chinese stocks.
“The Nasdaq is sinking as one bad Apple ruins a bunch of mega-cap tech stocks,” said Edward Moya, senior market analyst at OANDA. “Apple’s growth story is heavily dependent on China, and if Beijing’s crackdown intensifies, it could cause a big problem for other mega-cap tech companies that depend on China.”
The tech-heavy Nasdaq 100 index fell about 1%, while the Philadelphia Semiconductor index, which includes several Apple suppliers, fell 2.5% on Thursday.
Interesting timing
Bank of America Corp. analyst Wamsi Mohan notes that “the timing of a potential ban is interesting,” given Huawei Technologies Co.’s recent high-end 5G-capable smartphone.
The dismantling of the new device shows that Beijing appears to be making early progress in its nationwide effort to circumvent U.S. efforts to curb its rise. According to the analysis, Huawei’s Mate 60 Pro has Semiconductor Manufacturing International Corp.’s 7nm chips. conducted by TechInsights for Bloomberg News.
If Beijing implements the ban, the unprecedented blockade could also affect several other US technology companies that depend on sales and production in China. Apple suppliers across continents fell on Thursday as several reports confirmed China’s latest moves.
However, bullish analysts such as Wedbush Securities’ Daniel Ives believe “the impact of an iPhone ban will be overwhelming” as it would affect fewer than 500,000 iPhones out of the roughly 45 million he expects to sell in the country over the next 12 months.
“Despite the loud noise, Apple has seen huge share gains in China’s smartphone market,” Ives, who has an overweight rating on the stock, wrote in a note.
