Apple, Microsoft To Be Hit As China Bans Foreign Computers, OS In Government Offices

China has asked its central government agencies and state-backed corporations to replace all foreign PC hardware and operating systems with domestic alternatives within two years, Bloomberg reported on Friday, citing people familiar with the plan.

What Happened: The Chinese government, which has been regularly barring certain products from procurement lists to promote Chinese items, told the staff of state-owned firms to turn in foreign PCs for inhouse Chinese alternatives, according to the report.

The move is one of the most aggressive pushes by Beijing as part of its decade-long campaign to replace imported technology with local alternatives due to rising privacy concerns.

The report added that the order would extend to provincial governments later. 

Why It Matters: This decision is likely to hit sales of tech giants, including HP Inc. HPQDell Technologies Inc DELLMicrosoft Corp. MSFT, and Apple Inc. AAPL, as China will replace at least 50 million PCs on a central-government level alone, Bloomberg reported.

Following the news, shares of Chinese multinational tech firm Lenovo Group Ltd erased losses to jump nearly 2% in Hong Kong in an otherwise volatile market.

Price Action: According to Benzinga Pro, shares of Apple closed 5.57% lower on Thursday in the U.S., while HP and Dell fell 3.66% and 3.18%, respectively.

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