Apple Inc. (AAPL) stock slipped 1.8% in early trading Thursday, Oct. 19, after reports surfaced that its Apple Watch Series 3 abruptly lost cellular connectivity in China recently.
The Series 3 watch was the first of its kind to have independent cellular connection, meaning the watch can make calls and send and receive data without a handset nearby. But the feature was cut off without explanation in China, according to a report from the Wall Street Journal.
The cellular connectivity feature had only been available for state-owned China Unicom Ltd. (CHU) customers when the watch was released in late September. About one week after the watch was released, new subscriptions for the watch to China Unicom were ceased without explanation.
Analysts surmise the issue is related to the watch's use of eSIM technology that is harder to regulate than traditional mobile phone technology. In China, mobile phone users have to purchase a SIM card from a network carrier and register using their legal name. The carrier then embeds the SIM card in the phone and the government can keep track of who owns what.
The Series 3 watch's eSIM cards are embedded by Apple, not a carrier. That means users can choose their operators and plans more freely, but it makes tracking the identity of the device's owner harder for the government.
Customers who bought an Apple Watch Series 3 between the time it was released Sept. 22 and the time the suspension started on Sept. 28 still have connectivity, the Journal reported.
Apple stock was also pulled lower following a report from Taiwan's Economic Daily newspaper saying several suppliers had been told by Apple that it will cut orders for iPhone 8-related components by as much as 50% for the final three months of the year.
More of What's Trending on TheStreet: