Apple Inc. shares tumbled in premarket trading on Thursday, on track to wipe out $194 billion of market value in just two days, as China plans to expand a ban on the use of iPhones to government-backed agencies and state companies.
Shares of the Cupertino, California-based company fell as much as 3.2 per cent premarket, after slumping 3.6 per cent on Wednesday. It would mark the second time in roughly a month that its shares have seen such a sharp decline.
China, which is the technology giant’s biggest foreign market and global production base, has been on a years-long effort to root out foreign technology used in sensitive environments. The latest development also coincides with Beijing’s effort to reduce its reliance on American software and circuitry.
If Beijing goes ahead, the unprecedented blockade might also affect several other US technology companies that rely on sales and production in China. Apple suppliers across continents were trading lower on Thursday as multiple reports confirmed China’s latest changes.
However, bullish analysts like Wedbush Securities’ Daniel Ives think the effect of an “iPhone ban is way overblown” as it would affect less than 500,000 iPhones of the roughly 45 million he expects to be sold in the country over the next 12 months.
“Despite the loud noise Apple has seen massive share gains in China smartphone market,” Ives, who has an overweight rating on the stock, wrote in a note.