November 30, 2023

(Bloomberg) — Shares of Apple Inc fell nearly 3% on Thursday, wiping out nearly $200 billion in market value in just two days, as China threatened to ban the use of iPhones for government-backed agencies and state companies. is planning to expand.

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Shares of the Cupertino, California-based company fell 6.4% in its worst two-day decline in a month. Apple, the biggest component of major US equity indexes, has been involved in a massive sell-off due to multiple crises in China.

The world’s second-largest economy is reeling under a long-running crisis in its real estate market, threatening demand for everything from commodities to consumer electronics. The iPhone maker counts China as its biggest overseas market and global production base.

Apple’s woes are mounting as US Treasury yields rose as bond selling fueled concerns that the Federal Reserve will step up its fight against inflation as the US economy remains resilient.

The news is having a cascading effect on markets, with investors selling everything from chips, mega-cap tech to US-listed Chinese stocks.

“The Nasdaq is plunging because a bad Apple ruined so many 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 action intensifies it could create a bigger problem for a bunch of other mega-cap tech companies dependent on China.”

The tech-heavy Nasdaq 100 index was trading about 1% lower, meanwhile the Philadelphia Semiconductor index, which includes many Apple suppliers, was down 2.5% on Thursday.

interesting times

Bank of America Corp analyst Vamsi Mohan says the “timing of a potential ban is interesting” given the company’s recent launch of high-end 5G-enabled smartphones from Huawei Technologies Co.

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The destruction of the new device shows Beijing is making initial progress in a nationwide effort to block US efforts to curb its dominance, according to an analysis of Huawei’s Mate 60 Pro being replaced by Semiconductor Manufacturing International Corp’s 7nm chips. is being operated. It was conducted by TechInsights for Bloomberg News.

If Beijing moves forward with the ban, the unprecedented blockade could also affect many other US technology companies that rely on sales and production in China. Apple suppliers across various continents were trading lower on Thursday as multiple reports confirmed the latest changes from China.

However, bullish analysts such as Daniel Ives of Wedbush Securities believe that “the impact of the iPhone ban is overstated” as it will affect less than 500,000 iPhones out of the approximately 45 million expected to be sold in the country over the next 12 months.

“Despite the hype, Apple has gained massive share of China’s smartphone market,” Ives, who has an overweight rating on the stock, wrote in a note.

(Updates with stock moves and adds context about Huawei smartphones.)

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