The China-Apple Debacle 📱

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The China-Apple Debacle

After just being in the news for the healthy partnership with chip maker Arm, Apple once again made headlines but for reasons unexpected: international politics. Breaking reports on Thursday claimed the Chinese government may have banned iPhone usage from all government employees. Although the news has not been made official by the Chinese government, some have speculated that the report could indicate Apple being tied to growing international tension between the United States and China. As China’s economy operates under a hybrid communist-and-capitalist structure, the entirety of the state possesses several aspects of society relative to other countries. The prohibition of iPhones for government workers could also spell workers in state-owned enterprises. Currently, there are an estimated 56 million citizens working in fully state-owned units, posing a major market loss for the smartphone provider.

With China presiding as Apple’s third-largest market accounting for 18% of revenues, shareholders did not take this news in good faith. The share price for Apple fell roughly 3% by the bell, making a weekly loss of 5.5% which equates to a loss of $152 billion in market capitalization. The purported move by Chinese officials could also follow an ongoing trend for the promotion of domestic products, one of the leading factors to the United States’ widened trade deficit. With government employees unable to utilize Apple’s ecosystem, several associates and family members could follow suit, with Apple losing upwards of 5% of their revenues made in China. Until the story is confirmed, investors should hope the news doesn’t come to fruition, as the loss could indicate a weakened top line for the trillion-dollar company.

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I am not a financial advisor and my comments should never be taken as financial advice. Investments come with risk, so always do your research and analysis beforehand.

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