Tech titan, Apple, faces growing challenges as China announced it was extending bans on iPhone use last Wednesday.

Apple’s market cap dropped almost US$200bn (A$300bn) last week, in response to iPhone bans from China on government-backed agencies and companies. ¹²

Chinese government officials had previously banned Apple products for personal use more than two years ago.

As a result, the most valuable tech stock has dropped by close to 5% over the past five days.

China is one of Apple’s biggest markets, especially for iPhones. 

Roughly 20% of Apple’s 2022 revenue came from China, not to mention that the majority of Apple’s iPhone products are manufactured in Chinese factories. In fact, research firm TechInsights estimated that there were more iPhone sales in China than in the United States over Q2 2023. 

Apple is also facing increased competition from China’s, Huawei, which recently launched two new smartphones: the foldable Mate X5 and the Mate 60 Pro Plus. 

This is Huawei’s first high-end processor since it was targeted for sanctions by the U.S. in 2019, and one with features comparable to the latest generation of Apple’s devices. 

Huawei will be hoping to rebound strongly after reporting a plunge in its net profit for 2022, down 69% from the year before to 35.6 billion yuan, or just over US$5 billion. 

Before the U.S. sanctions on China were imposed, Apple had a global market share of about 15%. 

In the first quarter of 2023, that share was over 20%, with most of the increase attributable to its sales in China, although it dropped back to 16% in Q2 2023. 

Indeed, the iPhone is Apple’s key revenue generator. Of Apple’s $394.3 billion revenue in 2022, 52% came from iPhone sales.

Apple  debuted the new, iPhone 15 on Tuesday, following a third consecutive quarter of declining revenues, the company’s most prolonged sales slump since 2016.

The tech giant is expected to make its new, more powerful A17 processor exclusive to the ‌iPhone 15 Pro‌, as well as introduce periscope zoom lens technology for the top-end ‌iPhone 15 Pro‌ Max as a standout feature.

More than just a battle of tech companies, the move by Chinese authorities appears political in nature, as tensions rise between the two biggest economies in the world.

Past performance is not a reliable indicator of future performance.