Tech giant Apple has seen its share value drop by almost $300 billion in just two days after Chinese authorities indicated they were planning on extending a ban on iPhones to include government-linked agencies.
The California-based company saw its stock price fall 2.9 per cent on Friday, bringing the total decline since Wednesday to about 6.5 per cent, at a time when it is already struggling with flagging sales.
Earlier this week rumours began to emerge the Chinese government was planning to expand an existing ban on Apple’s signature iPhone in sensitive departments to include government-linked agencies and state companies.
Sources from inside several major companies suggested employees were being directed to leave the devices at home as part of a push to tighten controls on information security, which may also be part of a response to new United States measures aimed at curbing Chinese access to emerging technology.
The restrictions threaten to reduce Apple’s share in one of the world’s largest consumer markets – one which generates about one fifth of the tech company’s revenue.
China is also the country which produces the majority of the world’s iPhones, with massive factories across the nation employing millions of Chinese workers.
That has led many experts to assume the company would remain relatively safe from government restrictions, although heightened geostrategic competition with the US appears to have shifted the picture.
While reports of the potential ban have sparked an initial sell-off of shares, analysts noted there is no formal written directive from government as of yet and that different agencies will likely enforce any measures in different ways, making it hard to predict what the real impact will be.
Some have also pointed to the recent release of a new domestic smartphone, Huawei’s Mate 60 Pro, as being potentially linked to the decision.
Chinese state media last week hailed the device, which makes use of micro-chip technology not previously seen in China, as evidence its companies were matching US rivals despite restricted access to cutting edge techniques.
Experts believe it is possible the government’s move to expand a ban on iPhones could be in part motivated by a desire to push citizens toward purchasing the Huawei device.
Regardless of the reasoning behind the decision, even a minor expansion would likely cause a significant drop in sales for the US tech giant at a time where it is already facing pressure to turn around sluggish performance.
Shaky demand for smartphones and tablets has seen Apple’s sales numbers fall for three straight quarters, with the company hoping the announcement of a new generation iPhone later this month will help halt the slide.
Bloomberg is also reporting Apple plans to increase the price of some of its higher end models this year in a bid to bring in more revenue.