Any employee who is currently stationed at Chinese central government agencies has been barred from bringing and using smartphones of foreign origin, including iPhones. With tensions rising between the U.S. and China, the latter is reportedly attempting to reduce its reliance on foreign technology, increase cybersecurity, and prevent sensitive data from being leaked.

Apple shares dropped by 3.6 percent after China introduced a ban on iPhones

iPhones can no longer be used in chat groups or meetings, with the devices being outright banned by the Chinese government while at work. However, those restrictions do not appear to apply to the same employees when using iPhones at their homes or outside their workplaces. According to The Wall Street Journal, the news of this ban struck Apple negatively, as the company’s shares were down 3.6 percent. As most of you know, China is one of Apple’s biggest markets, accounting for about a fifth of the technology giant’s overall revenue.

The Chinese government does not appear to spare any U.S.-based company and its technology as it pushes to achieve self-reliance. The U.S. has not pulled back on any punches either, with trade sanctions placed on both Huawei and ZTE, along with efforts being made to ban TikTok at a local, state, and federal level. Other U.S. firms like NVIDIA and AMD have stated that AI chips cannot be sold to China and Russia, though the Biden administration denies that this decision was made.

DA Davidson analyst Tom Forte says that despite having a humongous presence in China, Apple is ‘not immune’ to the decisions taken by the government. Amid growing tensions between the U.S., it is the unintended victim in this saga. However, Forte says that these limitations should inspire such companies to start diversifying their supply chain to be less dependent on China, which has been Apple’s goal for quite a while now.

The California-based entity has attempted to shift some production from China to regions like Vietnam and India, but according to earlier reports, it will take years before Apple significantly reduces reliance on this country. There is not expected to be an immediate impact on Apple’s earnings, but with the iPhone 15 launch happening next week, the recent move from the Chinese government could not have happened at a worse time for the company.

News Source: The Wall Street Journal