Apple Inc (NASDAQ:AAPL) is facing challenges in China due to geopolitical tensions and economic uncertainties.
However, analysts believe the biggest threat comes from Huawei Technologies Co., Ltd, which has made a significant breakthrough in semiconductor technology despite U.S. sanctions.
China’s largest semiconductor maker, SMIC, recently developed a new chip that has raised concerns in Washington about Huawei’s ability to access critical components despite the sanctions.
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Huawei has long been accused of national security risks due to its alleged ties to the Chinese Communist Party and the military.
In 2019, the U.S. imposed sanctions that limited Huawei’s access to critical technologies, affecting its smartphone business. Huawei’s chips, previously manufactured by Taiwan Semiconductor Manufacturing Company Ltd (NYSE:TSM), became inaccessible due to U.S. export restrictions.
However, Huawei recently released the Mate 60 Pro in China, featuring a chip made by SMIC, a company also on the U.S. Entity List. This raises questions about how Huawei managed to obtain the chip despite the sanctions.
The new chip, named the Kirin 9000S, is manufactured using a 7-nm process by SMIC, a significant milestone for China’s semiconductor industry.
While SMIC’s achievement is notable, it remains unclear how efficient and profitable this process is on a large scale, particularly in terms of chip yield.
The U.S. Department of Commerce has shown interest in Huawei’s chip, which raises concerns in Washington and may lead to further export restrictions.
As geopolitical tensions persist, Huawei’s resurgence poses the greatest threat to Apple in China.
Price Action: AAPL shares traded higher by 0.29% at $178.49 premarket on the last check Tuesday.
Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.
