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Apple's iPhone shipments could fall by 30pc after Trump's WeChat ban

iPhone stock image
iPhone stock image

Apple’s iPhone shipments could fall by as much as 30pc following President Donald Trump’s ban on Chinese messaging app WeChat.

Ming-Chi Kuo, an analyst at KGI Securities, told investors that in the worst-case scenario, Apple would be forced to remove the services on its App Stores globally.

"Because WeChat has become a daily necessity in China, integrating functions such as messaging, payment, e-commerce, social networking, news reading, and productivity, if this is the case, we believe that Apple's hardware product shipments in the Chinese market will decline significantly," Kuo wrote in the report, first reported by MacRumors.

"We estimate that the annual ‌iPhone‌ shipments will be revised down by 25–30pc, and the annual shipments of other Apple hardware devices, including AirPods, iPad, Apple Watch and Mac, will be revised down by 15–25pc."

If the ban only extended to Apple’s US App Store, Kuo estimates that iPhone shipments would drop between 3pc and 6pc, while Apple other products would fall less than 3pc.

The comments follow Trump’s signing of executive orders on Thursday night prohibiting US residents and companies from doing any business with TikTok or WeChat, citing the national security concerns.

While Apple does not report its iPhone shipments by region, it is thought that China accounts for around 15pc of its total revenue, so pulling WeChat off the App Store “would be a serious hindrance,” said Anand Srinivasan, an analyst with Bloomberg Intelligence.

Tencent-owned WeChat, which has 1.2 billion users globally, is central to digital life in China. It’s the go-to app for a billion people for shopping, payments, email, web browsing and all forms of business and personal communications.

Without access to WeChat, consumers would likely balk at buying an iPhone in China and other parts of Asia.

An online forum popular with stock investors asked users if they would give up their iPhones or WeChat if Apple eliminated the app from its store: They voted to ditch their phones by a margin of 20 to one.

Trump’s order could also prompt China to retaliate, damaging Apple even further.

Much of the Cupertino-based company’s manufacturing is done in China, and if the country targets Apple’s exports that would impact its business globally, Srinivasan said.

“This is a war with battles on multiple fronts and the battle has now escalated into software,” he said.