iPhone ban a 'retaliation' against US restrictions on Chinese tech - expert

China's ban on government workers using iPhones - which led to a dramatic fall in Apple's share price - could be retaliation to the United States' restrictions Chinese tech capabilities, an expert has said.

And Ben Barringer, equity research analyst at investment management firm Quilter Cheviot, believes Apple's revenue could be hit by as much as 5 per cent if the ban extends to state-owned businesses.

He believes the ban imposed by the Chinese government could be as a result of the US' restrictions on Huawei technology introduced by former president Donald Trump.

Mr Barringer said: “The recent move by the Chinese government to restrict the use of non-Chinese smartphones in government buildings and by government employees is seen by many as a retaliation to the US restrictions on China's tech capabilities.

“This decision primarily impacts Apple, and there's speculation that the restriction might extend to employees of state-owned businesses.

“To put this into perspective, China accounts for approximately 20 per cent of Apple's revenues.

“Government employees represent less than 5 per cent of China's population, which translates to a potential 1 per cent decrease in Apple's revenue. If the restrictions spread to state-owned enterprises, Apple could face up to a 5 per cent revenue impact.

“Additionally, investors are reflecting on the Huawei situation. The Trump administration had previously restricted Huawei, which led to the company's struggles in building a competitive smartphone.

“However, Huawei has now released a new phone, the MATE P60, using Chinese-based silicon.

“While it's a decent product, it doesn't quite match the iPhone's standards but gives the Chinese a quality alternative.

“Over the past five years, Apple has capitalised on Huawei's absence, capturing a significant market share in China. It's worth noting that the Chinese government typically refrains from imposing bans unless they have a domestic alternative.

“Now that they have a homegrown smartphone option, it accentuates the concerns surrounding these restrictions.

“The resurgence of Huawei raises the question: will Apple's market share in China decline as Huawei regains its footing?”