2023-09-09 16:20:02
The Wall Street Journal reported earlier this week that China banned government officials from using iPhones in the workplace. Bloomberg also said the ban may eventually be extended to government-backed institutions and state-owned enterprises.
In addition, the CCP’s goal is to complete the substitution of domestic products within the government and state-owned enterprises by 2024.
Apple shares sold off for a second straight day on Thursday as investor concerns about the company’s business in China continued to grow. The question for investors is whether the problem is limited to state employees in the workplace, or whether it is indicative of broader challenges in China that could jeopardize revenues.
Some analysts said investor concerns may be exaggerated because Chinese officials “may have begun avoiding the use of U.S. products in the workplace long before official bans were issued.”
Evercore ISI analyst Amit Daryanani said the ban is negative for Apple, but it’s unclear how big an impact it will have. Because before the official ban was enacted, Chinese officials may have self-banned and avoided using American products in the workplace out of political consciousness.
As for Wall Street’s concerns about the CCP’s measures, Dayanani said it was understandable because the Chinese market accounts for about 19% of Apple’s revenue. “Any more meaningful restrictions may hit the bottom line,” but he also believes that this is “unlikely to happen” unless Apple starts to move its supply chain out of China at a pace that makes the CCP uncomfortable.
Daryanani pointed out that Apple disclosed in its 2019 information that the company supported more than 5 million jobs in China. Therefore, it is difficult for the (Chinese Communist Party) to take more substantive measures against Apple without affecting employment in China. action.
Wedbush analyst Dan Ives also believes recent concerns about China are “overdone.” He believes that this measure may affect 500,000 of the approximately 45 million iPhones that Apple expects to sell in the country next year.
“We believe that despite all the noise, Apple’s share of the Chinese smartphone market has grown significantly,” he said. According to his calculations, Apple has gained about 300 basis points of market share in China over the past 18 months and may see additional traction in the iPhone 15.
For Chinese Communist Party agencies, the current viable option is to issue employees with computers from local brands such as Xiaomi and Huawei, but even then, these computers will eventually run the Windows operating system of the American company Microsoft.
Even if the CCP manages to replace all Macs at the state-owned level, it will not be able to stop consumers from buying various Mac models for the time being, allowing Apple’s business to continue to grow. For now, there aren’t many alternatives that authorities can turn to, and it doesn’t offer the same level of security as macOS.
Apple is expected to launch the device at its new product launch event next Tuesday (12th).
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