Apple's iPhone to Bear Brunt of US-China Tensions as the Asia Giant Looks to Extend Ban to State Agencies

China's move against the U.S. to broaden its ban on iPhones in sensitive departments encompassing government-backed agencies and state companies signaled increasing difficulties for Apple Inc AAPL in its largest foreign market and global production hub. The ban comes on the heels of Apple's latest iPhone model launch.

This move comes amid Beijing's efforts to reduce reliance on American technology, further fueled by the U.S. sanctions on China over semiconductor technology and efforts to reduce supply chain dependence on China.

Several agencies have already instructed their staff not to bring iPhones to work. Additionally, Beijing aims to extend this restriction to numerous state-owned enterprises and other government-controlled entities, Bloomberg reports. 

The potential blockade is part of China's long-standing endeavor to eliminate foreign technology from sensitive environments.

The unprecedented measure threatens Apple's position in a market responsible for about a fifth of its revenue and where it manufactures most of the world's iPhones through extensive Chinese factories. 

The extent to which companies and agencies will adopt these restrictions remains uncertain, with some prohibiting iPhones in the workplace while others may ban them entirely. 

Other U.S. companies with significant exposure to China, including Nvidia Corp NVDA, are also jittering over China's next move. Several U.S. chipmakers had already discussed with the U.S. government to go a little softer on its China policy.

Last week, Huawei Technologies Co, Ltd's release of a smartphone with an advanced made-in-China processor was seen as a victory against U.S. sanctions.

Despite increasing tensions between the U.S. and China, Apple relies heavily on the Asian country for manufacturing and as a significant market. 

Meanwhile, as Rhodium Group estimates, Chinese businesses have cut investment in the U.S. to the lowest since the global financial crisis.

The value of completed Chinese foreign direct investment transactions in the U.S. was $2.49 billion in 2022, less than half the amount in 2021 and the smallest since 2009.

The size of assets held by Chinese companies in the U.S. stagnated at $282 billion as of 2021, roughly the same level as in 2017.

Employment by Chinese firms in the U.S. dropped to just 140,000 in 2021, a decline of over 60% from 2017.

Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.

Price Action: AAPL shares traded lower by 3.60% at $176.34 premarket on the last check Thursday.