A top analyst shares his take on China's Apple ban (It may surprise you)

Apple  (AAPL) - Get Free Report is a consumer electronics company goliath. Its focus on user-friendly designs – a major focus of founder Steve Jobs – has created some of the most loyal customers on the planet. 

Apple's iPhone commands 56% of the smartphone market in the United States, but it's also widely used overseas, given its global market share of 27%. Last year alone, Apple shipped over 225 million iPhones worldwide – a truly jaw-dropping figure.

A big reason behind Apple's iPhone success has been increasing sales in China, the company's third largest market behind the U.S. and Europe. Last quarter, China contributed nearly $16 billion to Apple's revenue, approximately 20% of its total haul.

The opportunity to sell more of its devices in China is big. However, its reliance on China for such a large proportion of revenue could cause headaches for CEO Tim Cook. The U.S. and China often don't see eye to eye, and as a result, the two countries have been at loggerheads over the use of each other's technologies. 

China takes aim at Apple

Apple devices are common in China, and it manufactures most of its iPhones there. Yet, that hasn't stopped government leaders in Beijing from turning up the heat on the Cupertino, Calif.-based company.

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This week, the Wall Street Journal reported that employees in roles privy to sensitive government data should stop bringing their iPhones to work. The move is the latest escalation in an ongoing feud between the U.S. and China over technology access. 

Previously, the U.S. banned many companies from selling products to China that can be used in next-generation technology, including artificial intelligence.  

President Biden signed an executive order curbing U.S. individuals and companies' investments in semiconductors, quantum computing, and some artificial intelligence systems there last month. China's foreign ministry responded, saying it "resolutely opposes the U.S.'s insistence on introducing investment restrictions on China." 

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It's unclear if China's decision regarding Apple is a tit-for-tat. In the past, it's signaled an interest in divorcing itself from reliance on U.S. companies for next-generation software and hardware. 

China's latest decision to selectively ban the use of iPhones amps up that rhetoric. No formal written policy appears to have been written yet, but worry is increasing that bans could spread to workers throughout China's local and state governments.

Technology analyst Dan Ives calls risks "overblown"

Apple's stock fell by nearly 6% between the close on Sept. 5 and Sept. 7. The drop has shaved $107 billion off Apple's nearly $3 trillion market cap. 

That's a lot of money, but not everybody is convinced that investors should be selling Apple's shares, including Wedbush Securities' long-time technology analyst Dan Ives.

On the recent China news over the last few days we believe in a worst case scenario any China government agency iPhone ban is way overblown as to quantify its less than ~500k iPhones of roughly 45 million we expect to be sold in China over the next year. iPhone 15 on deck