Why Did Apple Stocks Decline? China is to Blame
Recently, Apple stocks have come under fire, with their price dropping by 6% in just one week. Many are wondering what caused this decline and why China plays such a significant role in this situation.
The first reason that negatively impacted the company’s stocks is China’s ban on the use of iPhones by government officials. This decision led to a decrease in stock prices and a loss of $212 billion in market capitalization over two days. Bank of America Corp. analyst Vamsi Mohan notes that the potential ban’s timing may be related to the recent release of Huawei Technologies Co.’s new high-quality 5G smartphone. This has raised additional concerns and a negative sentiment in the market, resulting in a company stock plunge.
It is important to note that China is Apple’s largest foreign market, accounting for 19% of their total revenue. Therefore, any changes in China’s policies directly impact the company’s stocks.
Furthermore, it is worth mentioning that not only Apple stocks declined but also the stocks of Apple suppliers, including U.S. companies with a significant presence in China. Stocks of companies like Broadcom, Qualcomm, and Texas Instruments, which are suppliers for Apple and have a substantial presence in the Chinese market, dropped by 1.4-4.7% when the U.S. market opened. This indicates that the situation has an overall negative effect on the entire industry.
Broadcom, Qualcomm, and Texas Instruments are technology companies involved in the development and production of semiconductors and other components for a wide range of electronic devices. Broadcom is one of the world’s largest semiconductor manufacturers, offering solutions in wireless communications, networks, and digital technologies. Qualcomm specializes in chip development and production for mobile devices and network technologies. Texas Instruments is also known for its semiconductor solutions, including microcontrollers and digital signal processors. These companies actively collaborate with Apple, supplying various components for their products, and have a presence in the Chinese market.
China plans to further expand the ban on the use of iPhones in government agencies and state-owned companies. The reason for such measures is that the use of Apple devices by officials is considered a risk to national security. China has already banned employees of certain ministries from using iPhones. This puts additional pressure on the company’s stocks and raises concerns about its future in the Chinese market.
It is worth noting that Apple is a leader in the premium smartphone segment in China, so this situation is of particular importance to the company.
The European Commission has also named Apple as one of the six technology firms acting as “gatekeepers” of online services. This means that the company has greater responsibility and is subject to greater scrutiny in Europe, which could put additional pressure on its stocks.
In the last quarter, more iPhones were sold in China than in the United States. This indicates the significance of the Chinese market for Apple and that any changes in relations with China significantly impact the company.
However, Apple hopes to revive demand with the launch of the new iPhone 15 next week. The future development of the situation and how the company will cope with problems in the Chinese market are questions that only time can answer.
Conclusion
Apple’s stocks have fallen due to the negative impact from China. The ban on the use of iPhones by officials and the release of a new smartphone from Huawei have led to a slump in the company’s stocks. China is the largest foreign market for Apple, so any changes in China’s policies have a negative effect on the company’s stocks and the entire industry. Apple hopes to revive demand with the launch of the new iPhone 15, but the company’s future in the Chinese market remains uncertain and requires attention.
