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SHANGHAI/TAIPEI: China’s widening curbs on iPhone use by government staff intensified a sell-off in global tech stocks on Friday on fears Apple (AAPL.O) and its suppliers could take a hit from rising Sino-U.S. tensions and growing competition from Huawei.
Apple shares tumbled 6.4% in the previous two days, wiping $190 billion from its market capitalisation, following news Beijing ordered some central government employees in recent weeks to stop using iPhones at work.
Several Wall Street analysts on Friday said the selloff was overdone, claiming that any revenue hit for Apple would likely be small due to the phone’s popularity in China. After two days of declines, Apple shares rebounded in Friday trading, up 1.3%.
Apple is facing stepped-up competition from China’s Huawei, which launched two new smartphones – the foldable Mate X5 and the Mate 60 Pro+ – that drew global attention for showcasing resilience to U.S. sanctions.
Some analysts believe Huawei’s moves could be a first step in comeback efforts by China’s “national champion” to rival Apple after it took some market share following U.S. sanctions rolled out four years ago. Apple is set to roll out a new iPhone on Tuesday following a weak quarter for sales of its flagship product.
“We believe Huawei’s activity this time was well prepared and not sudden,” said Ivan Lam, an analyst at Counterpoint, whose outlook for the new products exceeds previous estimation. “It can manage the psychological expectations of the target consumer group before Apple’s press conference.”
China has been a bright spot for Apple, its third-largest market behind the Americas and Europe, in an otherwise tough period for iPhone sales. Huawei’s smartphone business was decimated after the United States curbed tech exports to it in 2019.
Apple’s sales in China this year have been helped by rare deals launched by its third-party retailers in February that offered discounts on its iPhone 14 Pro by as much as 10%. However, analysts told Reuters that those discounts could end up undermining sales of Apple’s new products set to launch in the coming days
