The intensifying chip war between the United States and China has taken a new turn, with Apple finding itself at the center of the conflict.

According to a report from The Wall Street Journal, China has issued a directive instructing central government officials at certain regulators to refrain from using Apple's iPhone or any other foreign-branded device for official purposes. Bloomberg further revealed that the ban on iPhones will be expanded to encompass more government-backed agencies and state companies.

As a result of these developments, Apple's stock has plunged by 3.3% in Thursday's trading, following a decline that began on Wednesday. The company is now facing the prospect of a two-day loss of approximately 7%, its worst performance over such a period since November 2022.

The Chinese government has previously justified restrictions on American memory chip manufacturer Micron Technology's products by citing concerns over network cybersecurity and national security. Experts believe that the extension of this approach to iPhones may be driven by a similar rationale.

However, it is important to note that there is no evidence suggesting that either iPhones or Micron chips pose a national security risk to China. This retaliatory action likely stems from a series of semiconductor-related technology bans imposed by the United States in recent years, which have curtailed China's access to cutting-edge artificial intelligence chips and state-of-the-art chip-making equipment.

The escalating chip war between the U.S. and China continues to have far-reaching implications. As the conflict unfolds, it remains to be seen how Apple and other tech giants will navigate these turbulent waters.

The Escalating Chip Battle Between the US and China

In May, there were concerns expressed that the ongoing chip battle between the US and China could potentially spiral out of control. This issue takes on greater significance considering the number of American corporations that have established business operations within China, including well-known giants such as Tesla, Apple, Starbucks, and Nike.

China is a major market for Apple, accounting for approximately 20% of their overall sales. With uncertainty surrounding any additional actions China might take to restrict iPhone use, it is clear that multinational companies with significant revenue exposure to China cannot afford to ignore the potential risks.

US technology companies, particularly chip makers, may encounter more challenges within China. Analyst Jordan Klein from Mizuho highlighted Apple's wireless chip suppliers, including Skyworks Solutions, Cirrus Logic, and Qorvo, as companies that could be adversely affected by the situation in China. He specifically identified Qualcomm as being at "high risk" due to its exposure in this sector.

Earlier this year, New Street Research stated that Qualcomm may bear the brunt of the intensifying chip war between the US and China, as there is a possibility of companies finding alternative sources for their chips.

As a result of these concerns, Qualcomm's stock experienced a 7% decline on Thursday. Furthermore, the iShares Semiconductor ETF, which tracks the performance of the ICE Semiconductor Index, was down by 3.1%.

Turf Maintenance Equipment Manufacturer Toro Faces Challenges

Communications Services Companies Face Pressure Amid Market Volatility

Leave A Reply

Your email address will not be published. Required fields are marked *