The decision by the Chinese government to expand its ban of iPhones and other Apple products for its state employees and employees of state-owned companies has several implications for Apple's profitability. Here's a breakdown:

1. **Immediate Market Impact**: The immediate drawdown of Apple shares by 6-7% reflects investor concerns over the potential decline in Apple's sales in one of its most significant markets, which, as stated, accounts for nearly a fifth of its revenue. This is a significant portion of Apple's global sales, and any decrease in sales can affect Apple's profitability.

2. **Long-Term Implications**: If the restrictions extend further, Apple might see a sustained decline in its Chinese market revenue. Moreover, given the size of China's state-owned sector (with over 56 million employees), even if a small fraction of these workers opt to replace their iPhones due to the restrictions, it can lead to significant revenue loss for Apple.

3. **Geopolitical Considerations**: The ban appears to be part of broader geopolitical tensions between the US and China. While Apple is caught in the crossfire, it's a symptom of larger international trade and tech disputes. If these tensions escalate, Apple (and many other companies) may face more significant challenges.

4. **Potential Overreaction**: Morgan Stanley analyst Erik Woodring's assertion that the share losses are "overdone" is based on his belief that the restrictions might not significantly dent Apple's revenue in the long run. His worst-case scenario prediction is a 4% revenue hit, less severe than what the market reaction might suggest.

5. **Apple's Dependence on China**: Apple's deep integration with the Chinese economy, especially its manufacturing, makes any form of decoupling a complex and challenging task. Though Apple has made moves to diversify its production to countries like India, the vast majority of its products are still made in China.

6. **Counteractions and Broader Decoupling**: If geopolitical tensions continue, and there's further "decoupling" of the US and Chinese tech economies, it could have broader ramifications. This could go beyond just sales and impact production, supply chains, and more.

7. **Tit-for-Tat Measures**: The actions against Apple can be seen as a retaliation to the bans on Chinese companies like Huawei in the US and other countries. This dynamic indicates that individual company performance and stock prices can be significantly affected by broader geopolitical decisions, sometimes unrelated to the company's operations.

In conclusion, while a 6-7% drawdown in Apple shares might seem steep, it's a reflection of both the potential immediate revenue impact and the broader uncertainties surrounding the US-China geopolitical landscape. Investors tend to react to uncertainties, and in this case, the potential ramifications for Apple in one of its biggest markets have led to a cautious approach.