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Friday, September 18, 2020

WeChat ban could impact Apple’s global iPhone shipments: Analyst predicts

According to Kuo, Apple's "annual global iPhone shipments could decline by 25–30 per cent if it is forced to remove WeChat from its App Stores around the world".

By: Tech Desk | New Delhi | Updated: August 11, 2020 10:17:21 am
WeChatWhite House officials are said to have reassured American businesses that a ban on its WeChat app won’t be as broad as feared (File Photo)

Besides TikTok, President Donald Trump has banned US transactions with WeChat and its parent company Tencent by issuing an executive order last week. As per a latest research note from analyst Ming-Chi Kuo, first reported by MacRumours, the ban on WeChat can impact iPhone shipments globally for bad.

According to Kuo, Apple’s “annual global iPhone shipments could decline by 25–30 per cent if it is forced to remove WeChat from its App Stores around the world”.

In the report, Kuo highlights “optimistic and pessimistic scenarios depending on whether Apple is only required to remove WeChat from the App Store in the United States or if the ban would apply to the ‌App Store‌ in all countries.”

It is worth noting that WeChat is an extremely popular messaging application in China as it helps to connect with the rest of the world. The app is being used by over 1.2 billion monthly active users around the world. Kuo argues that a global ban on WeChat in the ‌App Store‌ would not just impact China but also Apple.

Also Read | What is WeChat and why does Donald Trump want to ban the Chinese app?

“Since WeChat is very critical to Chinese users, integrating communications, payments, e-Commerce, social software, news reading, and productivity functions, we believe that the move will tank ‌iPhone‌ shipments in the Chinese market,” The MacRumours report notes. “We estimate that global ‌iPhone‌ shipments will decline by 25–30%. Global shipments of other Apple hardware products, including AirPods, iPad, Apple Watch, and Mac, will decline by 15–25 per cent,” the report further states.

Kuo says if WeChat is only removed from the US ‌App Store‌ then the global ‌iPhone‌ shipments would be impacted by 3–6 per cent with other Apple products being affected by less than 3 per cent.

According to the report Apple’s Greater China shipments accounted for slightly over 15 per cent of its total revenue in June quarter. This makes China an important country for Apple.

The report states, “Kuo recommends that investors reduce their stock holdings of companies in Apple’s supply chain such as LG Innotek and Genius Electronic Optical due to the risks of a WeChat ban. It does, however, remain to be seen what will happen as the prohibitions laid out in the executive order do not take effect until September 20. As a result, there is still time for the order to be clarified, modified, or rescinded.”

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