China’s government has reportedly expanded its ban of iPhones to local government workers and state-owned companies, a day after it emerged central government employees were forbidden from bringing the devices to work.
Several agencies had begun instructing employees not to bring iPhones to work and the ban was expected to be further extended, Bloomberg reported. Nikkei reported at least one state-owned company had told its employees that anyone working with trade secrets could not bring their iPhones, Apple Watches or AirPods into work from next month.
The ban on the use of Apple products is believed to be a sign of Beijing pushing back on its reliance on US tech. China has more than 150,000 state-owned companies, according to state media, employing more than 56 million people in 2021.
China’s central government has imposed some restrictions on the use of foreign-made tech in workplaces linked to government since at least 2018, but this week it was reported the rules were expanding to smartphones. Many Chinese employees of affected organisations have a separate phone for work.
On Thursday the Wall Street Journal and Reuters reported that China had widened existing curbs on the use of iPhones by state employees, telling staff at some central government agencies to stop using their Apple mobiles at work. Officials at central government agencies were given the instructions by their superiors in workplace chat groups or meetings.
In response to the news, Apple shares fell more than 6% over Wednesday and Thursday, though they rose 1% on the open of trading on Friday. China is one of Apple’s biggest markets and generates nearly a fifth of its revenue. Greater China – including China, Hong Kong and Taiwan – is Apple’s third largest market and accounted for 19% of its $394bn (£316bn) in sales last year.
The Morgan Stanley analyst Erik Woodring said Apple’s share losses were “overdone” as he did not believe the curbs would lead to something broader. Woodring predicted the worst-case scenario was a 4% revenue hit for the company.
“China is critical to Apple‘s success, but Apple is also critical to the Chinese economy,” he said.
“While the potential for a broad decoupling between Apple and China in this multipolar world clearly exists, we don’t believe recent headlines are necessarily foreshadowing this ‘worst case’ scenario.”
Apple production remains centred in China, with about 90% of its products made in the country. Among others, the Taiwan-founded Apple supplier Foxconn has its megafactories in China, employing more than 1.2 million people. But after political instability and pandemic disruptions, Apple has accelerated plans to move some production elsewhere, including Vietnam and India. IPhone 14 production was moved to India.
The move was the first time Apple had assembled an iPhone model outside China the same year it was released and was widely seen as the big step in moving manufacturing operations from the Chinese state. India is the world’s second-largest smartphone market.
Apple has found itself the latest tech industry victim of geopolitical tensions between the US and China.
Some analysts suggested Beijing’s bans on Apple were part of tit-for-tat measures, after Huawei bans by the US and others – including Costa Rica last week – from national 5G networks. The US continues to restrict China’s access to vital equipment needed to keep its chip industry competitive.
The US government has banned approvals of new telecommunications equipment from Chinese telecoms firms Huawei and ZTE because they pose “an unacceptable risk” to US national security. It has also banned the Chinese-owned video app TikTok from government-issued phones and has imposed restrictions on the export of some sophisticated computer chips to China.
Beijing has told operators of important infrastructure in China to stop buying products from the US chipmaker Micron Technology, while ramping up efforts to be more self-sufficient in making semiconductors – known as the “brains of electronic devices”.
Apple was contacted for comment.
