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In the worst case, Apple’s annual iPhone shipments to China can fall by 25 to 30% if forced to remove WeChat from its App Store worldwide, according to a new research note from analyst Ming-Chi Kuo noticed through MacRumors. The deletion may be due to a recent executive order prohibiting U.S. transactions with WeChat and its parent company Tencent.
Kuo presents positive and pessimistic scenarios depending on whether Apple is required to remove WeChat from the App Store in the United States or whether the ban would apply to the “App Store” in all countries.
WeChat works incredibly with Chinese mobile users, operating primarily as its own platform over iOS and Android for many users, and Kuo argues that a global WeChat ban on the “App Store” would be devastating due to the length of the Chinese market. Training
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. We estimate that the annual iPhone shipments will be revised down by 25–30%, and the annual shipments of other Apple hardware devices, including AirPods, iPad, Apple Watch and Mac, will be revised down by 15–25%.
Under his optimistic scenario in which WeChat is only removed from the U.S. App Store, Kuo predicts iPhone shipments would be impacted by 3–6% with other Apple products being affected by less than 3%.
Apple breaks down its iPhone shipments by region, but overall, Greater China accounted for just over 15% of Apple’s overall profits in the June quarter, making it a significant component of Apple’s business.
Kuo recommends investors’s fair share of Apple’s home chain corporations, such as LG Innotek and Genius Electronic Optical, because of the dangers of a WeChat ban. However, it remains to be noted what will happen, since the prohibitions laid down in the decree do not take effect until 20 September. Therefore, there is still time to clarify, modify, or reverse the order.
Update 10:36 p.m. This article originally stated that 30% is minimized in reference to total Apple iPhone shipments, however, the study note is not entirely transparent as to whether it relates to global or Chinese shipments. Given the Chinese percentage of Apple’s total sales, this is more likely to refer to Chinese shipments.
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