Apple shares fall 6.4% on Huawei threat as China worries

China’s escalating restrictions on the use of iPhones by government employees triggered a selloff in global tech stocks on Friday. Fears that Apple and its suppliers could be hit by rising Sino-US tensions and increased competition from Huawei. Apple shares fell 6.4% over the past two days, wiping $190 billion off its market capitalization, after news Beijing in recent weeks ordered some central government employees to stop using iPhones at work.

Several Wall Street analysts said Friday that the selloff was overstated, claiming that the phone’s popularity in China would outweigh any impact on Apple’s revenue. Apple shares were up 1.3% in early Friday trading, after two days of decline. Apple faces stiff competition from China’s Huawei, which launched two new smartphones — the foldable Mate X5 and Mate 60 Pro+ — that drew global attention for showing resilience to US sanctions. Some analysts believe Huawei’s moves could be the first step in China’s efforts to return as a rival to national champion Apple after taking some market share following US sanctions four years ago. Apple is set to launch a new iPhone on Tuesday after a weak quarter for sales of its flagship product.

We believe that this time Huawei’s activity was well prepared and not sudden. said Evan Lam, an analyst with Counterpoint, whose outlook for new products is higher than previously estimated. It can manage the psychological expectations of the target consumer group before Apple’s press conference. China has been a bright spot for Apple in an otherwise difficult period for iPhone sales, its third-largest market after the US and Europe. Huawei’s smartphone business was decimated after the United States imposed curbs on tech exports in 2019.