Apple stock drops due to reports of a Chinese government iPhone ban.

Apple’s shares have experienced a consecutive two-day drop following reports of a ban on Chinese government workers using iPhones. The company’s market valuation has declined by over 6%, or nearly $200 billion, during this period. China is a crucial market for Apple, representing 18% of its total revenue in the previous year and serving as the primary manufacturing location for its products through its primary supplier, Foxconn.

The initial report from The Wall Street Journal revealed that Beijing had instructed central government agency officials to refrain from bringing iPhones to the office or using them for work. Subsequently, Bloomberg News indicated that the ban might extend to employees at state-owned firms and government-backed entities. These developments occurred just ahead of the expected launch of the iPhone 15 on September 12.

Although there has been no official statement from the Chinese government regarding these reports, they have already impacted Apple’s stock and the shares of some of its suppliers. Qualcomm, the world’s leading supplier of smartphone chips, saw its stock drop by more than 7%, while South Korea’s SK Hynix experienced a roughly 4% decline.

This situation unfolds amid escalating tensions between the United States and China. In response to restrictions imposed by Washington and its allies on China’s access to certain chip technology, China reciprocated by limiting exports of materials crucial to the semiconductor industry. Additionally, Beijing is reportedly preparing a $40 billion investment fund to bolster its chip manufacturing sector.

Huawei, a prominent Chinese tech company, unexpectedly unveiled its Mate 60 Pro smartphone during a visit by US Commerce Secretary Gina Raimondo to Beijing. The phone features a new 5G Kirin 9000s processor developed by China’s largest contract chipmaker, SMIC. This development was seen as a significant technical advancement for China’s semiconductor industry, highlighting its progress.

US Congressman Mike Gallagher, who chairs the House of Representatives committee on China, has called on the Commerce Department to further restrict exports to Huawei and SMIC, indicating that the ongoing tech rivalry between the US and China continues to intensify.