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Apple’s $200 billion valuation wipeout may foreshadow a post-US tech future

  • Apple experience a $200 billion market cap drop amid investor concerns about China.
  • A new phone from Huawei has been built mostly with equipment from China.
  • It’s a sign that US export controls aren’t hurting China, which is becoming technologically independent.

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With less than a week to go before the release of the iPhone 15, there should be a huge buzz around Apple as it prepares for the biggest event in its calendar year. Instead, it’s having to nurse a sudden $200 billion drop in market value.

Recent rumblings in China, which is Apple’s fastest-growing region outside the US, signal that the new phone may not fly off the shelves. It’s also ominous for US tech dominance more broadly.

China has been a hugely important market for Apple. Apple generated almost a fifth of its $394.3 billion net sales from the region in its last fiscal year.

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CEO Tim Cook visited Chinese government officials in March to try and smooth relations.

“Innovation is developing rapidly in China and I believe it will further accelerate,” Cook reportedly said at the time. He was right, but probably didn’t foresee what it might cost his firm.

A post-US tech future may well be taking shape.

This week, Apple’s main competition in China, Huawei launched a new 5G smartphone, the Mate 60 Pro. The big shock: Despite heavy Western chip sanctions on Huawei that should have kneecapped its phone business, the Mate 60’s hardware is pretty much all made in China.

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Though China has had a number of homegrown tech companies serve its domestic market for some time now, such as Huawei, Xiaomi, or Oppo, these companies have historically been dependent on US exports to secure parts that put their phones close to par with Western ones.

That’s changed in recent years, as tensions between the US and China boil over on everything from security and trade to China’s hawkishness over Taiwan, leading Washington to introduce policies that effectively bar Chinese companies from using Western gear.

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Specifically, controls introduced by the Joe Biden administration on October 7 last year significantly limited exports of key technology like chips to China.

But Huawei’s new $960 phone is full highly advanced and domestically-built tech, such as a 7-nanometer processor built by China’s Semiconductor Manufacturing International Corporation, Bloomberg reported. Other parts have reportedly been sourced locally too, from Beijing to Guangzhou.

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Whatever the actual capabilities of the new phone, it’s a signal to Chinese consumers (and Western lawmakers) that Chinese manufacturers can give them homegrown technology.

The developments are enough to threaten new iPhone sales in China, according to analysts at Jefferies, who said in a note this week that “Chinese consumers see it as a big win over US sanctions.” They estimate the Mate 60 could knock 38% of potential iPhone sales in China.

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