WeChat ban ‘could cost Apple 30% of global sales’
Apple will face an impact of up to $28 billion in iPhone / iPad sales in China as well as related impacts to service revenue due to the US ban on WeChat, reports Seeking Alpha. wechat apple
WeChat is the messaging, social media, and electronic payment application owned by the Chinese company Tencent Holdings. US President Donald Trump issued an executive order against WeChat.
China is Apple’s third largest market where it generated about $44 billion in net sales in 2019.
The ban puts the Chinese market for Apple devices, primarily iPhones and iPads, at high risk if a full crackdown occurs.
Apple, along with Ford, Walmart and Disney have called on the Trump administration to end the executive order seeking the ban of WeChat.
China is still a very important market for Apple products, as the third largest revenue driver and the second largest contributor to net income on an operating margin basis.
If 75 percent of iPhone / iPad sales in China vanish because of the ban, that estimates a decline of $21 billion in net revenues aside from a related drawdown in services, which could add $4-5 billion to that decline estimate,” said the report.
If Apple was forced to remove the service from its global app stores, iPhone annual shipments will decline 25% to 30% while other hardware, including AirPods, iPad, Apple Watch and Mac computers, may fall 15%-25%, TF International Securities analyst Kuo Ming-chi estimated in a research note. Apple didn’t immediately respond to Bloomberg News’ requests for comment.
A survey on the twitter-like Weibo service asking consumers to choose between WeChat and their iPhones has drawn more than 1.2 million responses so far, with roughly 95% of participants saying they would rather give up their devices. “The ban will force a lot of Chinese users to switch from Apple to other brands because WeChat is really important for us,” said Sky Ding, who works in fintech in Hong Kong and originally hails from Xi’an. “My family in China are all used to WeChat and all our communication is on the platform.”
Tencent hires first Washington lobbyist amid WeChat crackdown
Tencent has hired Roberto Gonzalez, who formerly served as Treasury Department deputy counsel and currently is a partner at Paul, Weiss, Rifkind, Wharton & Garrison, according to a new filing flagged by Politico.
