Apple's annual iPhone shipments could decline by 25–30 percent in a worst-case scenario if it is forced to remove WeChat from its App Store globally, according to research analyst Ming-Chi Kuo, as per an online report. This comes after US President Donald Trump signed an executive order on August 6 banning US transactions with Tencent, owners of messaging app WeChat, within 45 days. Chinese Android as well as iPhone owners use WeChat extensively, and a worldwide ban on the app could have far-reaching consequences for Apple.
Apple analyst Ming-Chi-Kuo argued that a worldwide ban would be devastating for Apple, due to the size of the Chinese market, as per a report by MacRumors. Kou analysed optimistic and pessimistic scenarios that depend on whether Apple has to ban WeChat from its App Store across the world, or if Apple removes Tencent's WeChat from the App Store only in the US.
In case of the former, Kuo warns that Apple's hardware product shipments in the Chinese market will decline significantly if WeChat is banned on App Stores worldwide. The analyst said that WeChat had become a daily necessity in China – it integrates messaging, payment, e-commerce, social networking, news reading, and productivity functions.
“We estimate that the annual iPhone shipments will be revised down by 25–30 percent, and the annual shipments of other Apple hardware devices, including AirPods, iPad, Apple Watch and Mac, will be revised down by 15–25 percent,” said Kuo in a new research note accessed by MacRumors.
If Apple is only required to remove WeChat from the US App Store, Kuo says that iPhone shipments would be impacted by 3–6 percent, and other Apple products by less than 3 percent. This would be a significantly lesser impact than if WeChat is banned from App Store worldwide.
Although Apple doesn't break down its iPhone shipments by region, Greater China accounted for a little over 15 percent of Apple's total revenue during the June quarter. Kuo recommends that investors should reduce their stock holdings in companies in Apple's supply chain such as LG Innotek and Genius Electronic Optical, due to the risk posed by the WeChat ban.
WeChat operates as its own platform on top of iOS and Android for many users, and is very popular among Chinese mobile device users. It is also a platform extensively used to communicate with individuals and businesses outside of China. Although Trump's order is ambiguous, the ban will greatly affect individuals who use the app on a daily basis.
“WeChat automatically captures vast swaths of information from its users. This data collection threatens to allow the Chinese Communist Party access to Americans' personal and proprietary information,” stated the executive order issued by the White House on August 6, banning US transactions with Tencent and ByteDance. The order states that it will come into effect 45 days after the announcement.
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