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Apple Suppliers' Stocks Fluctuate Amid China Concerns and Huawei's Rise

An unfolding saga between Apple and China intensifies as Huawei introduces competitive devices.

Logos of Huawei and Apple
Logos of Huawei and Apple

Apple's Market Shake-Up

China's decision to restrict iPhone use among government employees has triggered a significant dip in the global tech market. Apple's stock took a 6.4% nosedive in just two days, resulting in a loss of $190 billion in market value. This drastic drop was a response to Beijing's directive for central government workers to abstain from using iPhones in their workplaces. However, Apple's shares experienced a 1.3% bounce back on Friday.

Rising Competition from Huawei

China's tech giant, Huawei, has unveiled two innovative smartphones - the foldable Mate X5 and Mate 60 Pro+ - positioning itself as a strong contender against Apple. These phones, impressively resistant to U.S. sanctions, have heightened global interest. Analysts speculate that Huawei's aggressive strategy might mark the beginning of its endeavor to regain the market share it lost due to U.S. sanctions imposed four years prior.

Analysts Weigh In

Ivan Lam from Counterpoint shares his insights, emphasizing Huawei's calculated approach ahead of Apple's imminent product release. Meanwhile, China remains a beacon for Apple, holding the position of its third-largest market, despite ongoing challenges in iPhone sales. Remarkably, Apple's sales in China surged earlier this year due to special discounts offered on the iPhone 14 Pro.

Suppliers' Stock Movements

Apple's primary suppliers in Taipei, such as Largan Precision and TSMC, faced stock declines of 4% and 0.6% respectively. However, U.S.-based suppliers like Qualcomm and Broadcom remained relatively stable. Contrarily, shares in SMIC, Huawei's alleged chip provider, increased by 0.7%.

Uncertain Extent of China's Restrictions

The extent of China's restrictions on iPhones remains hazy. Sources have revealed that even business visitors might be affected by this curb. In response, companies are providing financial incentives to encourage the switch to local brands. According to an estimate by Bank of America, this move could potentially reduce iPhone sales in China by 5 million to 10 million units annually.

Experts' Predictions and Comments

Analyst Ming-Chi Kuo foresees a 65% increase in sales for Huawei's new Mate 60 Pro. Other experts believe Apple's stronghold in China will not waver, emphasizing the country's extensive Apple ecosystem. But a prevalent sentiment among Wall Street analysts is that even a giant like Apple, with deep-rooted connections in China, isn't immune to escalating Sino-U.S. tensions.

The U.S. and China Tech Tug-of-War

The ongoing tussle between the U.S. and China over technological supremacy continues. The U.S. seeks to limit China's access to advanced tech, and conversely, Beijing is pushing to decrease its dependence on American technology. Recent analyses indicate a rise in China-made components in Huawei's latest models, signaling Beijing's advancements in the tech sector. The U.S. Commerce Department has initiated a probe into Huawei's new chip to determine any breach of trade restrictions.