Is China Planning to Restrict iPhone Sales Forever amid rising tensions between US and China?

The government of China has banned the use of iPhones in sensitive departments to government-backed agencies and state companies, a day after central government employees were forbidden from bringing the devices to work, as per reports. Many Chinese employees of affected organisations have a separate phone for work.

It has also been reported that there are several agencies that have started instructing employees not to bring Apple mobiles to work, and this ban is expected to be further extended.

It doesn’t stop at the iPhone! At least one state-owned company had also instructed its employees that anyone working with trade secrets should not bring their iPhones, Apple Watches, or AirPods into work starting in October.

This is not happening for the first time; the central government of China has imposed some restrictions not only on Apple devices but on foreign-made tech products in workplaces as well, that are linked to the government since at least 2018.

However, China hasn’t issued formal or written orders yet, to ban the use of iPhones or any other foreign phone brand. It remains unclear to what extent various companies or agencies might eventually impose restrictions on personal devices.

China has over 1.5 lakh state-owned companies, employing more than 56 million people in 2021. So, will it be bad for the US, or is it the other way around? Let’s find out!

What could be the one of the major reason behind this ban on iPhones?

With the way the US is switching its focus towards the manufacturing and assembly of iPhones and other products from China to India, China is also trying to reduce its dependency on foreign products.

Before China, it was the US that made headlines by banning Huawei and TikTok, among others, and some analysts now believe that the ban on Apple might be a part of tit-for-tat measures.

Will it affect Apple in any way?

Apple shares fell 2.9% Thursday in New York, following a 3.6% decline on Wednesday—their biggest single-day drop since August 4, after the news came out. 

But here’s the catch: China happens to be one of Apple’s largest markets, contributing nearly a fifth of its total revenue. Greater China, including China, Hong Kong, and Taiwan, ranks as Apple’s third-largest market and was responsible for a significant 19% of its $394 billion (Rs. 32.75 lakh crore) in sales for the year 2022.

Above that, Foxconn, the Taiwan-founded supplier for Apple, has its megafactories in China, employing over 1.2 million people.

Apple production remains highly dependent on China, with roughly 90% of its products manufactured within the country’s borders.

A Morgan Stanley analyst raises a red flag, suggesting that these restrictions cannot lead to something broader or, in a worst-case scenario, result in a 4% decline in Apple’s revenue. He believes that China is critical to Apple‘s success, and conversely, Apple is also critical to the Chinese economy.

Do you believe that China will ban the sale of iPhones in the coming future?

Written By Shivani Singh

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