WASHINGTON – Beijing’s widening curbs on iPhone use by government staff raised concerns among US lawmakers on Thursday and fanned fears that American tech companies heavily exposed to China could take a hit from rising tensions between the countries.
Apple fell more than 3 per cent and was on track for its worst two-day decline since November after news that Beijing has told employees at some central government agencies in recent weeks to stop using their Apple mobiles at work.
Several Wall Street analysts said the curbs show that even a company with a good relationship with the Chinese government and a large presence in the world’s second-largest economy was not immune to rising tensions between the two nations.
Sino-US friction has worsened in recent years as Washington tries to restrict China’s access to key technologies including cutting-edge chip technology, and Beijing looks to reduce its reliance on American tech.
Apple supplier Qualcomm, one of the US companies with the largest China presence, tumbled nearly 7 per cent to lead losses among major tech firms.
Lawmakers of both major US parties have been vocal in their concerns about national security risks allegedly created by China’s products, pressuring the Biden administration to get even more aggressive with Beijing.
The wider ban is not surprising and shows how China is trying to limit a Western company’s market access to the nation, said US Representative Mike Gallagher, the chairman of the House panel on China.
“This is textbook Chinese Communist Party behaviour – promote PRC (People’s Republic of China) national champions in telecommunications, and slowly squeeze Western companies’ market access,” Mr Gallagher, a Republican, told Reuters.
US Senator Mark Warner, a Democrat and chairman of the Senate Intelligence Committee, also shared similar concerns and said, “as the Chinese economy stalls, we can potentially anticipate more aggressive moves against foreign businesses”.
China has curbed shipments from prominent US firms including planemaker Boeing and memory chipmaker Micron .
Other suppliers of the iPhone maker including Broadcom , Skyworks Solutions and Texas Instruments were also lower, falling between 1.8 per cent and 7.3 per cent. The drop in the technology sector weighed on the three main US stock indexes, particularly the tech-heavy Nasdaq Composite, which lost 0.9 per cent in afternoon trading.
“This announcement seems to have just refocused investors that the relationship between the US and China is a big risk to current equity prices, particularly in technology,” said Mr Rick Meckler, partner at Cherry Lane Investments.
iPhone slowdown
China has been a bright spot for Apple in an otherwise tough period for iPhone sales.
“China is a crucial market for Apple, not just because it’s a super-important manufacturing hub, but because the country is an increasingly important source of revenues,” said Ms Susannah Streeter, head of money and markets at Hargreaves Lansdown.
Apple gets nearly a fifth of its revenue from the country.
“Already rivals are closing the gap in high-end smartphone sales, and if the situation were to escalate this could potentially allow competitors to have a greater chance of stealing Apple’s crown,” Ms Streeter said.
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