14 DAY TRIAL // There’s a lot going on these days in the relationship between American and Chinese companies, and while Microsoft is about to purchase TikTok, Apple has its very own reason to keep an eye on the news these days.
United States President Donald Trump has recently banned U.S. transactions with WeChat and parent company Tencent, and while at first glance this doesn’t seem much for Apple, well, it actually is.
And it all comes down to the Cupertino-based tech giant being allowed to offer the WeChat app on the iPhone.
Analyst Ming-Chi Kuo explains in a note for investors that banning the WeChat app in the App Store for the global market would have a devastating effect for Apple, as he expects iPhone sales to drop by as much as 30 percent just for this reason.
Massive sales drop
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. On the other hand, Kuo says, Apple sales could drop by up to 6 percent if WeChat is banned only in the US.
“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%,” Kuo explained according to MacRumors.
For now, however, specifics on the ban are still pending, so it remains to be seen how Apple manages to deal with the whole thing if WeChat ends up being forbidden in global app stores.