Apple’s Wonderlust event takes place tomorrow — where the iPhone 15 and new Apple watches are expected to be announced. But the event has been overshadowed by the comeback of one of Apple’s biggest competitors (and a reported ban) — which risks jeopardizing the important holiday period.

• Last week, it was reported that the Chinese government plans to expand a ban on iPhones to local governments and state-owned companies.
• The iPhone makes up nearly half of Apple’s revenue, while China is estimated to make up ~20% of its sales.

The Chinese market has become increasingly important to Apple — with sales in the region tripling in the past 10 years. Although China and Apple have historically had a stable relationship, trade wars between the US and China, alongside the intended ban, are pressuring that relationship.

A familiar face comes back to haunt Apple

Remember Huawei, one of China’s largest phone manufacturers? In 2019, the Trump administration banned US companies from doing business with Huawei. This helped Apple grow its market share while Huawei’s tanked — losing access to critical supplies and nearly wiping out its consumer business.

But Huawei is clawing its way back, and recent news shows just how far it’s come. Ahead of Apple’s event, Huawei debuted new smartphones with download speeds surpassing top 5G phones.

• Analysts are anticipating a comeback from China’s “national champion” — whose new phones were sold out shortly after launch.
• Oppenheimer’s analyst Martin Yang says Huawei’s phone could reduce Apple’s unit sales by 10M next year, ~5% of total iPhone sales in 2022 (WSJ).

Forward-looking: Last Friday, JPMorgan said that the ban could have little material impact on sales, but further upside could be limited byAAPL

’s massive 40% rise this year — which has sent its price-to-earnings multiple to trade 16% higher than its five-year average (BBG).