Trump’s WeChat Ban Could Adversely Affect iPhone Sales: Kuo

Ruben Fields
August 10, 2020

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. And while the order would prevent transactions made by WeChat with US corporations, it may have an unintended effect; the order prevents Apple from distributing WeChat through the App Store.

Noted Apple (NASDAQ:AAPL) analyst Ming-Chi Kuo thinks Apple's annual global iPhone shipments could fall 25-30% if the tech giant has to remove the WeChat app from App Stores.

This is because WeChat is not just the most popular messaging app in China, it is also a preferred payment platform and also offers social media access, online shopping and even news.

"We believe that Apple's hardware product shipments in the Chinese market will decline significantly", he wrote in a research note as cited by MacRumors, referring to a worldwide removal of WeChat from the iOS app store. "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%". If the app is banned across all App Stores outside the United States, it would cost Apple and other players a significant loss in market share considering the size of China's smartphone market.

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China, the country where WeChat is extremely popular and which accounts for a significant share of Apple's sales, is likely to look elsewhere if the app is no longer allowed on the iPhone.

The worst-case scenario would be for Apple to remove WeChat from its global app store.

According to Trump's Thursday order, a ban would apply to "any transaction that is related to WeChat" made by any person or "any property" subject to the jurisdiction of the United States. The company doesn't break down iPhone sales by country, but the Chinese market makes up about 15 percent of Apple's total sales. Anand Srinivasan, a Bloomberg Intelligence analyst, said losing WeChat would be a "serious hindrance" to its Chinese iPhone sales. Kuo estimates around 3-6% decline in iPhone sales in such a case. 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.

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