China Notes ‘Security Incidents’ With iPhones as Agencies Bar Staff From Use

Customers look at the new iPhone 14 at an Apple store in Wuhan, Hubei Province, China, on Sept. 16, 2022. Getty Images

Beijing on Sept. 13 seemingly offered a rationale behind the state’s partial ban on iPhones while denying that it would outright ban Apple products.

“We noticed that there have been many media reports about security incidents concerning Apple phones,” said Chinese foreign ministry spokeswoman Mao Ning at a regular press briefing in Beijing on Wednesday. Bloomberg reported that the official English translation of the remarks omitted the reference to media reports.

“China has not issued laws and regulations to ban the purchase of Apple or foreign brands’ phones,” Ms. Mao said, adding that all companies operating in China need to adhere to regulations, and the government places “great importance” on security.

Last week, media outlets, including The Wall Street Journal and Bloomberg, reported that China was beginning to ban the use of iPhones within government agencies and then in state companies, causing shares to drop more than 5 percent on the morning of Sept. 7.

Apple did not immediately respond to a request for comment.

Swapping Apple for Huawei

According to the “China in Focus” program on NTD, the sister media outlet of The Epoch Times, the order to stop using iPhones had already been in play in certain regions. Still, Beijing seems to be pushing for it earnestly, with the ban applying to work devices in government agencies and some state companies nationwide.

Instead, workers are asked to use Huawei, which has suffered in recent years due to U.S. trade policies.  

Beijing recently announced a breakthrough with Huawei’s new 7-nanometer chip, proclaiming it a “triumphant return.”

Ahead of Apple’s Sept. 12 iPhone 15 launch event, Huawei also unveiled new smartphones.

A Commerce Department spokesperson told The Epoch Times in an emailed statement that the 2019 trade restrictions had “knocked Huawei down and forced it to reinvent itself —at a substantial cost to the PRC [People’s Republic of China] government” and was looking into the 7 nm chip for national security reasons.

Last month, Bloomberg reported that Beijing had granted $30 billion to Huawei to build out its “secret network” of semiconductor manufacturing hubs across China, with plans to invest $100 billion by 2030.

“China is roughly spending as much in subsidies as the rest of the world combined,” Chris Miller, author of “Chip War: The Fight for the World’s Most Critical Technology,” told Bloomberg. “So the numbers are absolutely enormous.”

For comparison, the 2022 U.S. CHIPS and Science Act granted American companies $39 billion in manufacturing incentives.

The concern is that if Huawei buys up and builds factories and facilities under other company names, it may find ways around the U.S. trade rules. This may allow it to purchase American technology and chipmaking equipment unnoticed.

Apple’s China Market

China is one of Apple’s biggest markets, responsible for nearly 20 percent of the Cupertino-based company’s revenue. While some workers are now keeping two phones—an iPhone for personal use and a Huawei phone for work—it’s unclear whether the ban could become official or expanded.

“We feel that this outcome is doubtful, however, and this is just a move in the tech chess match cold war between the U.S. and China after the Biden admin signed an executive order to impose blocks and regulations on tech investments in China,” Ken Mahoney, CEO of Mahoney Asset Management, previously told The Epoch Times.

China also serves as a critical manufacturing base for Apple. Although it has moved a good portion of its production outside of China to countries like Vietnam and India, it has continued to use Chinese companies like Luxshare Precision and Wingtech rather than Taiwan-based Foxconn.

Security

Apple has for years kept Chinese customers’ data locally on Chinese servers run by a Chinese state-owned company, adhering to Beijing’s wish to not allow information past its borders.

Experts have also commented that this practice makes it so that the Chinese regime virtually has unfettered access to consumer data, while Apple has commented that they retain encryption keys to the data, which is stored in those server facilities, and “have never compromised the security of our users and their data.”

This local storage means that although the United States has laws against companies sharing data with Chinese authorities, Beijing can demand the data from the server storage company rather than Apple.

Separately, the French government has ordered Apple to pause iPhone sales because new tests show they emit too much electromagnetic radiation.