China Bans iPhones For Central Government Officials, Impacting Apple Shares

China has officially prohibited central government officials from using iPhones, according to sources familiar with the matter, as reported by The Wall Street Journal.

Following this news, Apple’s shares experienced a significant drop of 3.6%, closing at $182.91 in New York. This decline marked the largest daily fall in a month. Prior to this incident, Apple’s stock had risen by 46% during the year.

Managers have been informing their staff about the ban through chat groups and meetings, but neither China’s Ministry of Foreign Affairs nor Apple has responded to media inquiries regarding the situation.

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A source who frequently deals with Chinese central government agencies revealed that, even before the pandemic, Chinese officials had been adhering to an unwritten rule of avoiding iPhones.

This was despite the absence of any formal policy on the matter. The source, who requested anonymity due to the sensitivity of the issue, also noted that central government officials now prefer smartphones from major domestic companies, with Huawei being a popular choice.

This move comes after some Chinese government ministries banned Tesla vehicles from entering their premises in June 2022, citing security concerns.

Apple’s CEO, Tim Cook, made a high-profile visit to China in March, highlighting the country’s significance as both a market and a manufacturing hub for the tech giant, accounting for approximately 19% of its total revenue.

The ban on iPhones for government officials might be seen as a response to similar actions taken by the United States against Chinese technology companies.

This development could potentially have a chilling effect on Apple and other prominent foreign brands with a substantial presence in China.

Companies like Huawei and ZTE have faced longstanding US restrictions, with the Biden administration going as far as banning approvals of new telecommunications equipment from both firms in November 2022, citing national security concerns.

Additionally, TikTok, owned by Chinese parent company Bytedance, has faced bans on its use by multiple US institutions, including the House of Representatives and several states, over fears that user data could be accessed by the Chinese government.