President Trump’s Huawei ban creates concern over Apple’s iPhone business in China

“Last week, U.S. President Donald Trump effectively banned U.S. companies from working with Huawei,” Mark Gurman and Jeran Wittenstein report for Bloomberg. “That’s sparked concern on Wall Street about potential retaliation by China, where iPhones are assembled and where Apple gets about a fifth of its revenue.”

“Trump’s latest move has already prompted dire threats from China, with the country’s ambassador to the European Union warning of retaliation on Monday,” Gurman and Wittenstein report. “‘There is a potential for a boycott’ of Apple products, said Shannon Cross of Cross Research. ‘There could be a movement in China to support national champions.’ Dan Ives, an analyst at Wedbush Securities, said 3% to 5% of iPhone sales in China may disappear over the next 12 to 18 months because of the U.S. ban on Huawei,”

“Beyond China, Huawei’s problems could help Apple. Trump’s ban means future Huawei handsets sold outside China will have to run without Google’s Android operating system and crucial services like the Play app store,” Gurman and Wittenstein report. “‘These issues will reduce demand for Huawei over coming years and could give Apple an incrementally better position in the marketplace,’ said Ives.”

Read more in the full article here.

MacDailyNews Take: Pieces of leverage are designed to create concern.

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  1. Apple’s iPhone business is ruined with little chance of recovery. Apple will have to raise already high iPhone prices even further. If the Chinese consumer wasn’t buying iPhones before, they’ll certainly be looking elsewhere next time around. The tariff trouble only made the iPhone’s decline happen sooner. It appears as though the Chinese consumer is turning their backs on Apple and seem quite satisfied with the idea of banning Apple products.

    So much for Tim Cook’s love of the loyal Chinese consumer. Now, they’re telling Tim Cook to take a hike. I think Apple had better use some of that cash hoard and get into another business that has little to do with China.

    Apple left itself far too exposed to China and will now be paying the price. The end of the iPhone era is at hand and Apple has nothing worthwhile to replace all that lost revenue.

    Apparently, Emperor Tim Cook bought himself a closet-full of new clothes from the Chinese people and this mess is what he’s got to show for it. The iPhone has now become a minor footnote in Chinese history. It would seem to me that Foxconn will lose out quite a bit if there is little consumer demand for the iPhone. Foxconn will have only half the production lines running and many people won’t have those seasonal jobs.

    1. Foxconn, Apple’s main assembler in China, is already setting up shop in Vietnam and India. But, it will take several years to get up and running anywhere near the manufacturing capacity of the Taiwanese (Foxconn’s) factories in China. Ah… how the sands of time shift. We are gonna have to wait 5, 10, 20 years to see how this all plays out globally.

      1. How can an automobile have political affiliations? The reality is that the European car market is much more competitive than in the Americas, which is why Europe is the home of some of the best automakers at any price point, and has a complete monopoly on the latest cutting edge supercars. The reason the USA has such a dearth of vehicle choices is because of protectionism. Foreign automakers have had no real choice but to create assembly plants in the USA due to exactly the same trade games that the feckless Trump administration accuses China of playing. Then despite the USA regulatory hypocrisy, Americans snatch up cheap Japanese and Korean autos that undercut USA marques’ prices so fast it makes your head spin — they practically own the small auto components market.

        So much for national pride there. Almost nobody cares what percentage of vehicle content was made where, just like electronics. “The Media” including MDN doesn’t even bother to report stuff like that.

        You would think to keep business and competition strong the USA would want to allow in the highest cost, honorable trade partners from Germany and restrict the IP thieving Asian makes, but as always, cheap labor rules the day. Americans want big and cheap, not high quality and sophisticated.

        Trump doesn’t get it and never will. He can only manage to engage one trade enemy at a time between rounds of golf and whining about his misunderstandings about Constitutionally mandated Congress oversight and enforcement of emoluments and so forth, so Korea gets a free pass.

        You know Ford, GE, and IBM supplied the Nazis too, right? Anything for a buck.

        1. No the Germans, Japanese, Koreans dominate because they stand up and solve the problem, Americans will sell out and run to cheap labor no matter what, right now the German companies are designing and engineering electric cars, and when they come out on to the market Tesla will be done.

  2. Time to put some effort in the Asian market.

    Since Anal-ysts are considering volume, create a dirt cheap iPhone. When I mean a cheap, I talk about features, not built quality.
    Put it on the Asian market and let it live. Some of those Asians will be addicted and move on their new Apple life…

    1. For now, Apple can’t afford to assemble devices in the US; those jobs are staying in Asia, for now. No wonder Terry Gou has been investing billions into assembly robots (at Foxconn). The robots, like the move to India and Vietnam, are going to take time.

      1. A top 5 global luxury corporation that can’t find anything better to do with its booty than to buy its own stock can’t afford to make its products close to its end customers???? It’s a question of values. Corporate executives aren’t rewarded for being good employers in the places they sell their wares, Their only direct incentives are to pump up stocks for short term self enrichment. Until the USA abandons its ridiculous goal of letting corporations dictate politics and avoid any real regulation, the manufacturing jobs will always go to the worst sh!tholes that American voters love to hate.

        How does MDN pretend to be a nationalist when it endorses all of Apple’s Chinese made gadgets and cheers for every short term stock bump? If you had principles, you would be advocating massive changes at Apple.

        What sucks the most is that everyone including investors are going to take a bath thanks to an incompetent administration that has nothing to show for its self proclaimed deal making skills. What will corporations do? Nothing. They will pass on the costs, hoard cash, and wait for the next administration to unravel the mess.

        1. All those buybacks aren’t going to matter much if a whole nation of people refuses to buy Apple products. Apple should have put that money to better use like creating a new business outside of China. It’s such a wasted effort of Tim Cook going around and boasting about Apple security and privacy and meanwhile, tens of millions of people will stop buying Apple products because they don’t give a crap about security or privacy. They’d rather just stick it to Apple for the sheer pleasure of ruining an American company.

          Apple should have done at least some of what Jeff Bezos did for Amazon. Expanding the company was Bezos goal while Apple hoarded its cash.

          All Apple tried to do was to squeeze the most profit out of one product. Obviously, that isn’t working out quite as well as was planned. Apple had to go and put all of its eggs into one basket and now the Chinese are smashing all those precious eggs and laughing about it. Big investors are not going to tolerate a 30% profit loss so Apple will have to start buying up shares once again.

          Yeah, Apple shareholders are going to take a bath, a freaking bloodbath. Thanks, Tim. The Chinese consumer doesn’t want anything to do with you or your company. No more smiling at ugly Americans.

  3. China’s government has not ceased being a murderous regime, in spite of what Hollywood may say. I honestly don’t have a problem with this. China can go to ****.

  4. the future: build iPhones in the United States with robots. suddenly Chaina’s biggest advantage becomes their biggest challenge; What to do with 1 billion people that are no longer needed for near slave labor. Already as china transitions to robot manufacturing they are laying off thousands of people at a wack. Robot manufacturing is the future rather we like it or not. Apple should move all operations out of China based on technology theft alone.

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