The ban on US companies from doing any business with Tencent’s Chinese WeChat service threatens iPhone sales in China, one of Apple’s main markets. After well-founded fears were expressed by Bloomberg, authoritative analyst Min-Chi Kuo, who knows the Cupertin giant like no one else, voiced his disappointing assessment for Apple.
Kuo believes that if the US does indeed impose a ban on WeChat (it should go into effect on September 20), it will severely shake Apple’s position in China’s largest smartphone market in the world. According to the analyst, iPhone sales will decline by 25-30%. In a message to the source, Kuo clarified that his estimate refers to total global iPhone sales, not the Chinese market.
The fact is that WeChat is the only messenger in China (WhatsApp and other services are blocked in the country). In addition to communication functions, the Tencent product also provides many other opportunities, including, acting as a payment instrument. People who come to China must install WeChat, otherwise they run the risk of being unable to pay for even small purchases, Bloomberg writes.
If Trump’s executive orders last week go into effect, Apple will have to remove WeChat from the App Store. At the same time, all transactions related to WeChat will also be blocked.
As noted by Bloomberg, this blocking Trump will only help Huawei, which, despite US sanctions and thanks to the loyalty of Chinese residents, bypassed Samsung for the first time in nine years last quarter and became the new leader of the global smartphone market.
Min-Chi Kuo published two scenarios for Apple (optimistic and pessimistic), depending on how large-scale the ban turns out to be. If WeChat is removed only from the US App Store, iPhone shipments will decline by 3-6%, and sales of Apple products – by less than 3%. If Apple is unable to bypass the ban on WeChat in China, iPhone sales will decline by 25-30%, and other devices – by 15-25%.
Source: Bloomberg and Macrumors