The US crackdown on Huawei Technologies Co could make Apple Inc’s already troubled business in China even more difficult, hobbling iPhone sales in the world’s biggest smartphone market and disrupting the company’s supply chain, according to analysts.
US President Donald Trump effectively banned US companies from working with Huawei. 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.
When trade tensions flared between the US and China late last year, some economists said there was an informal boycott by Chinese consumers of US products, including iPhones.
After Apple reported disappointing holiday results, CEO Tim Cook said the trade war was partly to blame.
Trump’s latest move has already prompted dire threats from China, with the country’s ambassador to the European Union warning of retaliation.
“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.”
Apple could lose nearly a third of its profit if China retaliated by banning its products, Goldman Sachs analysts estimated. Dan Ives, an analyst at Wedbush Securities, said 3 percent to 5 percent of iPhone sales in China may disappear over the next 12 to 18 months because of the US ban on Huawei.
Apple would face much more dire consequences if production restrictions were implemented in China, Goldman analysts led by Rod Hall said in a note.
“We do not believe the company would be able to shift much iPhone volume outside of China on short notice, though actions that would push Apple production outside of China could have negative implications for the China tech ecosystem as well as for local employment,” the Goldman analysts said.
Even if China doesn’t retaliate directly, nationalist sentiment will likely hurt Apple’s sales in the country and could cause the company to miss its fiscal third-quarter forecasts, according to Lynx Equity Strategies.
Apple didn’t respond to requests for comment.
In late April, before Trump’s Huawei ban, Apple reported slightly better iPhone sales in China. “There’s an improved trade dialogue between the US and China, and from our point of view, this has affected consumer confidence on the ground there in a positive way,” ook told analysts during a conference call.
Japan’s phone companies mull halting Huawei sales
Japan’s biggest wireless carriers are looking at halting sales of new Huawei Technologies Co phones, adding to woes of the Chinese mobile equipment maker that has been accused by the US of posing a security threat.
NTT Docomo Inc, Japan’s largest operator, said it is considering halting reservations for new Huawei products, while its rival KDDI Corp said it would indefinitely delay introduction of Huawei’s P30 handset.
YMobile Inc, a wireless phone brand operated by SoftBank, announced a similar move.
The steps underscore the stakes for Huawei, which
has overtaken Apple Inc as the world’s second-largest maker of smartphones and was on track to surpass
the largest, Samsung Electronics Co.