Bloomberg: Apple and Nike brace for China’s wrath after Huawei ban

“U.S. companies counting on China for a major part of their growth have targets on their backs as Beijing and Washington ratchet up trade-war tensions,” Bruce Einhorn writes for Bloomberg. “President Trump’s decision to blacklist Huawei Technologies Co., the Chinese maker of smartphones, while also threatening bans on other Chinese technology companies, could open the door to retaliation against U.S. brands from hotels to sportswear to even Captain America.”

“State media last week said China is ‘well armed to deliver counterpunches,’ without giving specific details,” Einhorn writes. “As companies await China’s next move, there is uncertainty about what form retaliation might take… China could use the template it honed in 2017 when relations with South Korea deteriorated over Seoul’s decision to deploy a missile shield. The government curbed travel to South Korea, hurting cosmetics companies that rely on Chinese tourists, while local authorities shut most of Lotte Shopping Co.’s China stores, alleging fire safety violations. Consumers boycotted South Korean products, dealing a devastating blow to Hyundai Motor Co.’s sales.”

“The most obvious target is Huawei’s smartphone rival Apple Inc., which gets about a fifth of its revenue from China and manufactures its iPhones there. The Cupertino, Calif.-based company has already been suffering in the region, seeing sliding revenue as consumers buy more phones from Huawei and other local brands,” Einhorn writes. “Blowback from Trump’s Huawei ban could cost Apple about 3% to 5% of its iPhone sales in China over the next 12 to 18 months, according to Dan Ives, an analyst at Wedbush Securities.”

Read more in the full article here.

MacDailyNews Take: Apple suppliers employ 1+ million Chinese workers.

We continue to strongly believe that for a company that employs over 1 million Chinese workers with its flagship Foxconn factory and is a major strategic player within the China technology ecosystem…from a supply chain perspective Apple will not have major roadblocks ahead despite the loud noise. Taking a step back, we ultimately believe there is a low likelihood that Apple and its iPhones feel the brunt of the tariffs given its strategic importance domestically as well as [Chief Executive Tim] Cook’s ability to navigate these issues in the past with Trump and K Street. — Wedbush analyst Daniel Ives

Related articles:
Wedbush: Apple selloff is overdone, company faces ‘low likelihood’ that iPhones will be subject to tariffs – May 24, 2019
Gene Munster: China tariffs on Apple products unlikely – May 23, 2019
ARM cuts ties with Huawei after President Trump’s ban – May 22, 2019
U.S. to offer temporary exemptions to Huawei export ban – May 20, 2019
Apple Face ID parts supplier Lumentum halts shipments to Huawei following Trump administration ban – May 20, 2019
President Trump’s Huawei ban could end Android as we know it and possibly have a lasting effect on Apple – May 20, 2019
Huawei’s mockery of Apple over 5G chip sourcing didn’t age well – May 20, 2019
Google terminates Huawei’s Android license after Trump administration blacklist – May 20, 2019
Trump administration blacklists Huawei putting Apple at risk of retaliation from China – May 16, 2019

5 Comments

  1. “Apple suppliers employ 1+ million Chinese workers.”

    Since when did the leaders in a trade war ever care about its affects on local workers? Again, this trade war is not about trade, it is about geopolitics.

    1 million workers in China equates a quarter million in this country — China has more than 4 times the population of the U.S. It also has nearly 4 times the full time employed peoples.

    China averages adding 13 million full time positions per year urban areas. So 1 million jobs is pretty irrelevant during a trade war. And those job losses will be offset as China moves to a nationalist position of replacing American made goods with Chinese goods.

    For some real perspective sorely lacking here at MDN, from the Chinese media, Trump’s reelection bid trade war will cost nearly 2 million jobs.

    https://www.scmp.com/economy/china-economy/article/2185446/us-china-trade-war-slash-almost-one-million-jobs-us-economy

  2. POTUS really screwed over Apple shareholders. However, Apple should not have depended on the Chinese consumer to buy iPhones as much as it did. As was said many times in the past, Apple spent too much effort into selling a single product. Apple had the money and other resources to diversify its product line but chose not to. Apple just had to end up as being the only major tech company to take a fall in this China/U.S. trade war.

    It’s only natural the Chinese consumer back their own government or domestic brands and goes against Apple although their displeasure with Apple might be slightly misplaced. My one hope is that Apple learns a lesson from this and in the future never depends on a foreign country to bring in most of their revenue and profits.

    One would think there would be an awful lot of unhappy Chinese workers who aren’t going to get whatever pay they were expecting from spending countless hours on some iPhone production line. What a mess Apple has gotten into. Nothing is going to make up for revenue from a country of consumers refusing to buy Apple products. All those smiling faces around Tim Cook touring Apple Stores in China have turned into scowling faces. Curse those ugly Americans.

  3. Tim Cook led Apple is a one product company, with it’s supply chain and manufacturing in a communist country that has had eroding relations with the US for 3 years now. It is also dependent on this country for a large amount of it’s growth of the single product. Tim Cook has not diversified Apple the way he should have. Instead of Beats he should have purchased Netflix.

  4. I wonder if folks from Apple’s home country will do their part to support the war and stop using gunpowder, a Chinese invention, and fireworks, which is basically a Chinese monopoly.

  5. Well this is just dandy. So playing a game of trade ‘chicken’ is a policy for success?
    Trump’s ridiculous tariff war has delivered the Chinese an ‘entirely foreseeable’ unintended gift – a sure way to increase domestic company’s sales, by demonising US companies who had a large share of Chinese technology sales. Apple can kiss that market goodbye.
    “Trade wars are easy to win”…..right.

Add Your Feedback

This site uses Akismet to reduce spam. Learn how your comment data is processed.