Beijing’s decision to limit the use of the iPhone among state bodies has sparked concern among US legislators and raised fears that American technological companies with a significant presence in the Chinese market may suffer due to growing tensions between the two countries.
Reports that Beijing ordered employees of some central state bodies to stop using Apple smartphones at work led to a 2.9% decrease in Apple shares. This marks the company’s worst two-day fall in shares since November last year.
Analysts on Wall Street have noted that this situation demonstrates that even a company with strong relations with the Chinese government and a substantial presence in China is not immune to the escalating tensions between the two countries.
Amid a deterioration in relations between the United States and China, Washington is seeking to limit China’s access to critical technologies, including advanced chips. In response to these measures, Huawei is reportedly establishing a network of undisclosed production facilities in China for the production of semiconductors. This covert production will enable the company to bypass US sanctions and advance the country’s technological ambitions.
Leading political parties in the United States have expressed concerns about the alleged national security risks associated with Chinese products. They are calling on the Biden administration to take a more aggressive stance towards Beijing.
China has already imposed restrictions on deliveries from well-known American companies, such as the chip manufacturer Micron. Apple suppliers, including Qualcomm, Broadcom, SkyWorks Solutions, and Texas Instruments, have also suffered losses, with their shares falling by 1.8-7.3%.
Analysts predict that by 2024, Huawei will completely transition to the use of Kirin 9000S processors, which will put Qualcomm’s business in a precarious position. The supply of Qualcomm chipsets next year could potentially decrease by 50-60 million units. Assuming each chipset costs $180, this could result in an estimated loss of revenue of approximately $10.8 billion for the American company.
It is important to note that China is not only a crucial market for Apple as a production center, but also as an increasingly significant source of income. Nearly one-fifth of Apple’s income is generated from China.