Apple faces challenges after the decision taken in China

Following a decision against them by the Chinese government, the American tech giant Apple began to experience difficult days.

Apple faces challenges after the decision taken in China

In the face of rising tensions between China and the U.S., alongside Huawei's renewed market thrust, suppliers of Apple in China face an uncertain future. This uncertainty was triggered when Beijing directed its central government employees to refrain from using iPhones during work hours. As a result, Apple's stock value experienced a severe decline of 6.4% in just two days, erasing $190 billion from its market capitalization. The decline is largely attributed to China's position on the iPhone's use within its government sectors, fueling concerns about the long-term outlook for Apple and its supplier chain.

Such consequences were not limited to Apple. The broader Chinese stock market felt the ripple effect. The CSI 300 Index, representing some of China's top companies, registered a 0.5% decrease, culminating in a total loss of 1.4% for the week. Concurrently, the Shanghai Composite Index saw a decrease of 0.2%, and the Shenzhen Composite Index receded by 0.4%. Weather conditions further amplified the situation when Hong Kong halted trading for stocks and derivatives due to a severe rainstorm warning, marking the second weather-induced disruption within the month.

Apple faces challenges after the decision taken in China

Apple's primary suppliers were also impacted. Foxconn Industrial Internet experienced a 0.6% decline, closing at 19.08 yuan, while Luxshare Precision Industry witnessed a 2% drop, ending at 29.35 yuan. The downturns have been linked to the Chinese government's new iPhone restriction, particularly among employees working in areas like investment, trade, and international affairs. Several other suppliers, including battery producer Contemporary Amperex Technology, electric vehicle maker BYD, and AI server manufacturer Inspur Electronic, felt similar shocks in the market. Notably, even unrelated sectors like liquor production saw weakened positions, with Kweichow Moutai and Wuliangye registering losses.

Adding to Apple's challenges in one of its key markets, Huawei launched its new smartphones: the foldable Mate X5 and the feature-rich Mate 60 Pro+. These models displayed resilience against U.S. sanctions and captured significant global interest. Over in Taiwan, an essential base for Apple suppliers, Largan Precision and TSMC saw decreases in their stock values. Another notable drop came from Luxshare Precision Industry, partly due to the launch of Huawei's new products.

Many believe that Huawei's latest moves may signal its intent to contest Apple's dominant position. With the ongoing technological contestation between these industry giants, Apple and its Chinese suppliers face an unpredictable path ahead.