The Big Apple has gotten a little smaller. And we are not talking about New York, but about the star technology brand from Cupertino, in California. Apple has lost about $200 billion in market capitalization in the past week as tensions between the US and China escalate, with various news outlets reporting (first being the Wall Street Journal) that Beijing wants to restrict usage. of the iPhone to Chinese state employees. Apple shares fell 3% on Thursday and are down more than 5% for the week.
“Beijing is seeking to reduce its dependence on American technology and this ban is a major obstacle for Apple, since China is its largest international market and represents around 20% of its revenue,” recalled Victoria Scholar, head of investments at Interactive Inversor. , a UK investment platform.
Chinese Foreign Ministry spokesman Mao Ning said yesterday that "products and services from any country are welcome in the Chinese market as long as they comply with Chinese laws and regulations." Tensions between the United States and China have been rising, and early last month, President Joe Biden signed an executive order to impose blocks and regulations on US high-tech investment in China.
The iPhone ban comes at a bad time for Apple, which is preparing for the launch of its latest product. On Tuesday, September 12, it is expected to unveil its latest smartphone, the iPhone 15. Reports are circulating that big changes are coming for the iPhone, including a switch from Apple's connector to the USB-C plug that rivals are starting to adopt , partly in response to an EU mandate and there are unknowns about how the market will react.
Apple also faces a threat from Chinese tech giant Huawei, which recently launched its latest flagship smartphone, the Mate 60 Pro. According to early reports, the phone has enough power and speed to rival the iPhone and is selling quickly in China.
“Apple shares are unlikely to outperform in the second half of the year, as a high valuation and rising China risks take the shine off a highly anticipated product launch next week,” according to a JPMorgan report. China. “The restrictions will make it more difficult for Apple to continue generating profits,” they wrote.
The situation is not one of the best. The consulting firm Counterpoint Research expects smartphone shipments in 2023 to decrease by 6% year-on-year, to 1.15 billion devices, registering the worst data in a decade. “Despite the strength of the labor market and falling inflation, consumers are hesitant to upgrade their devices,” the research firm said.
Likewise, Apple shares have accumulated gains of nearly 40% so far this year and present a valuation multiple of 27 times one-year earnings. In a word, they are already expensive. And Apple is trading at a 16% premium to its five-year average level. China's chaos may be the perfect excuse for some to make profits.
