Ahead of Apple’s most important event of the year – the iPhone launch event – the company once again found itself stuck in the middle of trade tensions between the United States and China. The company’s market capitalization dropped by nearly $200 billion in two days after reports of Chinese authorities banning the use of iPhones at work for government officials. The ban, which will reportedly be expanded to government-backed agencies and state companies, could be a heavy blow to Apple, which is heavily reliant on sales in the world’s largest smartphone market.

As the following chart shows, China is a very important market for Apple, accounting for roughly 20 percent of the company’s total sales. After entering the Chinese smartphone market in 2010, Apple’s sales in the region grew more than 20-fold within five years, peaking at $58.7 billion in 2015 before gradually falling back to $40.3 billion in 2020, when Covid-19 heavily affected Apple’s business in the region. In the past two years, China has returned to being a growth driver rather than a problem child, however, with sales rebounding nearly 70 percent in the fiscal year ended September 2021.

The latest reports of an iPhone ban come on the heels of Huawei’s unveiling of its new Mate 60 Pro flagship smartphone, which could further weaken Apple’s position in China. The phone’s release raised some eyebrows in the United States, as it features a Chinese-made 7-nanometer processor – a chip so advanced that experts didn’t think Huawei had the capabilities to build after the U.S. banned exports of advanced semiconductors to China last year.

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