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China Bans Use Of IPhones, Other Foreign-Branded Devices By Government Officials

The move could result in a substantial headwind of up to 10 million units, significantly impacting Apple, say analysts.

China is enacting a ban on the use of Apple Inc. (NASDAQ:AAPL)’s iPhones and other foreign-branded devices by government officials.

This prohibition will extend beyond government personnel and encompass sensitive departments, government-affiliated entities and state-owned enterprises.

While China had previously imposed usage restrictions on foreign PC/laptops for government officials, this marks the first comprehensive effort to restrict Apple devices for official purposes.

An iPhone. China is enacting a ban on the use of Apple’s iPhones and other foreign-branded devices by government officials. (Lukas Gehrer/Pixabay)

According to analysts at Bank of America, including Wamsi Mohan and Joseph Leeman, China constitutes a significant market for the Cupertino-based company, accounting for approximately 40-50 million iPhone units sold by Apple or 20% of the total number of iPhones sold in 2022.

Should this ban be enforced, it could result in a substantial headwind of 5 to 10 million units, significantly impacting the tech giant, the analysts said in a Thursday note.

Furthermore, if iPhones are barred from official workplaces, the repercussions could be even more severe, given the proclivity of Chinese consumers to own and use multiple smartphones.

This isn’t merely a random act of iPhone sabotage by China; it’s part of Beijing’s long-running mission to reduce its reliance on foreign technology, especially in sensitive sectors.

Bank of America stated that the recent arrival of a Chinese-made high-end smartphone as a real competitor to an iPhone corresponds with the start of this possible ban.

An iPhone. China is enacting a ban on the use of Apple’s iPhones and other foreign-branded devices by government officials. (Lukas Gehrer/Pixabay)

Huawei recently unveiled its latest Mate 60 and Mate 60 Pro smartphones, equipped with the in-house Kirin 9000s chip, which exhibits performance levels on par with 5G speeds. This launch signifies a substantial achievement for the company, especially in light of the significant supply disruptions it faced following U.S. sanctions in 2019.

The math is stark – for every 1 million iPhones sold, there’s a potential $0.01-per-share impact on Apple’s earnings, according to Bank of America.

In an alarming twist, if Huawei claws back 10 million units from Apple in China, it could translate into an 11-cent headwind to Apple’s 2024 earnings per share.

But the nightmare scenario? Losing the 30 million units gained since the sanctions began, which could deliver a gut punch of 34 cents per share on Apple.

Shares of Apple Inc. were 3.1% lower at the time of writing on Thursday, after falling 3.6% on Wednesday.

 

© 2023 Zenger News.com. Zenger News does not provide investment advice. All rights reserved.

Produced in association with Benzinga

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