China Bans iPhones for Government Officials Ahead of iPhone 15 Launch

China has reportedly banned the use of iPhones among central government officials, just days before the unveiling of the iPhone 15, according to The Wall Street Journal.

This news caused Apple shares to drop by around four percent.

A follow-up report from Bloomberg suggests that this ban may soon extend to include state-owned companies and agencies.

Apple’s Complex Relationship with China

Apple CEO Tim Cook visited China in March 2023 and described the company’s interactions with the country as “a symbiotic kind of relationship.”

However, this relationship is somewhat uneasy, as seen by Apple’s decision to shift significant parts of its production from China to India.

The first rumors of iPhone production in India began in 2015, and the first phone to be assembled there was the iPhone SE in 2017.

Apple reportedly produced seven percent of its phones in India in 2022, with estimates suggesting that up to 18 percent of its phones could be made there by the end of 2025.

Protecting Against Political Battles

Apple has diversified its production to protect itself from the effects of being drawn into political battles, similar to what happened to Huawei.

Huawei faced sanctions by the US in 2019, which prevented it from using Google’s software and 5G chips from Western companies.

While Huawei was once a major player in the global smartphone market, it now holds only a small fraction of that presence, with an estimated three to four percent share of smartphone shipments.

The Importance of the Chinese Market

China was reportedly the biggest single market for iPhone sales in the second quarter of 2023, accounting for 24 percent of global shipments compared to the US’s 21 percent.

The iPhone is highly popular in China, commanding between 16 to 20 percent of smartphone shipments, making any restriction on iPhones in China potentially very unpopular.

Challenges of Restricting iPhones in China

If China were to restrict iPhones, the implications could be more wide-ranging than those imposed on Huawei.

Apple is not only a hardware manufacturer but also a platform, software, and services provider.

Pre-sanction Huawei phones relied heavily on Google’s platform, software, and core services.

Huawei, on the other hand, has managed to overcome some of the effects of sanctions with the recent announcement of the Huawei Mate 60 Pro.

This phone, released in 2023, uses a Huawei-designed Kirin 9000s chipset manufactured in partnership with Chinese fabricator Semiconductor Manufacturing International Corp (SMIC).

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