China plans to expand a ban on the use of iPhones in sensitive departments to government-backed agencies and state companies, a sign of growing challenges for Apple Inc in its biggest foreign market and global production base.
Several agencies have begun instructing staff not to bring their iPhones to work, people familiar with the matter said, affirming a previous report from the Wall Street Journal.
Beijing intends to extend that restriction far more broadly to a plethora of state-owned enterprises and other government-controlled organizations, insiders said.
Photo: EPA
If Beijing’s plan goes ahead, it might later erode Apple’s position in a market that yields about one-fifth of its revenue, and from where it makes the majority of the world’s iPhones through factories that employ millions of Chinese.
China’s potential restrictions on Apple caused the company’s shares to slide 3.6 percent in New York on Wednesday, their biggest single-day drop since Aug. 4. Apple had gained 46 percent this year before the decline.
The blockade on iPhones coincides with stepped-up efforts to develop domestic technology that can match or even surpass US innovation. The release of a Huawei Technologies Co (華為) smartphone that contained an advanced made-in-China processor gained media attention on both sides of the Pacific last week. State media celebrated an early triumph against US sanctions, while one US lawmaker called for an investigation into possible violations of those curbs.
Huawei uses an advanced 7-nanometer processor built by Semiconductor Manufacturing International Corp (SMIC, 中芯), China’s top chipmaker, to power its latest smartphone, a teardown commissioned by Bloomberg showed.
Existing rules require any company that intends to supply Huawei with US technology, which is present throughout SMIC’s operations, to get approval from Washington. It is unclear whether SMIC has a US license to supply Huawei.
“It sure looks like it did [violate sanctions],” US House of Representatives Committee on Foreign Affairs Chairman Michael McCaul said on Wednesday at a briefing at the US embassy in the Hague, adding that SMIC continues “to try to get our intellectual property.”
Meanwhile, South Korea’s SK Hynix Inc has opened an investigation into the use of its chips in the latest phone from Huawei, after a teardown of the device revealed its memory and flash storage inside.
Huawei’s Mate 60 Pro uses Hynix’s LPDDR5 and NAND flash memory, said TechInsights, which conducted the teardown of the device for Bloomberg.
The handset’s components are almost entirely provided by Chinese suppliers, and Hynix’s hardware is an isolated example of materials sourced from overseas, TechInsights said.
Icheon-based Hynix “no longer does business with Huawei since the US introduced restrictions against the company and, with regard to the issue, we started an investigation to find out more details,” a company spokeswoman said to Bloomberg on Thursday last week.
It is unclear how Huawei might have procured the memory chips from Hynix. which makes most of its semiconductors at plants in China. One possibility is that Huawei might be tapping a stockpile of components it accumulated as far back as 2020 before the full set of US trade curbs had been imposed on it.
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