China Bans Sale of iPhones

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iPhones

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A court in China recently granted a preliminary injunction against tech giant Apple banning the import or sale of older models of iPhones. The same court banned Micron Technology, the largest chip-maker in the US from selling its products in China. The ban does not include the iPhone XS, XS Plus, and XR. China is Apple’s 3rd largest market and accounts for a fifth of Apple’s profits while China makes up 67% of Qualcomm’s profits. The injunction was requested by the American microchip maker, Qualcomm for violating two patents owned by Qualcomm. The patents in question allow users to resize and edit photos and manage apps on a touchscreen. Even after the court injunction, Apple released in a statement that all iPhones models are still available in China. Apple claims that the ban only applies to iPhones running iOS 11 or early and all of their iPhones are running iOS 12. The Chinese court did not mention any software system in its injunction.  Apple has filed for an appeal in court.

The court ruling was probably influenced by the trade war between China and the United States. Only days earlier, President Trump and President Jinping agreed on a 90-day truce on tariffs. If the two largest economies in the world can’t reach an agreement by the end of the 90-day truce, Trump has threatened tariffs on almost all Chinese imports. Canada also announced that it is holding the chief financial officer of Huawei, which is China’s largest smartphone company for extradition to the US. Huawei also recently surpassed Apple as the second largest phone maker in the world. The court ruling came as a surprise as product injunctions are rarely granted and it was widely expected that Qualcomm’s request would be rejected. A growing number of Chinese companies are enforcing new policies that force their employees to use Huawei products over Apple or offer incentives to switch to Huawei.

This is not the first time Qualcomm and Apple have fought each other in court. In 2017, Apple sued Qualcomm for $1 Billion after Qualcomm illegally withheld its payment for the exclusive right to put their chips in iPhones. The EU later deemed the payments to be illegal and ordered Qualcomm to pay a $1.2 billion fine. Apple and Qualcomm are currently involved in several lawsuits over patent disputes.

Qualcomm later filed a 2nd injunction to ban the sale of the iPhone XS, XS Max, and XR. This latest escalation of the trade war between the US and China has caught Apple right in the middle of it. Only time will tell how negotiations between the US and China go on trade and whether or not the ban of other American products in China will continue.

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