How WeChat ban may be a big reason to worry for Apple

Joanna Estrada
August 10, 2020

A USA -only ban could cut 3-6% of iPhone shipments, according to Kuo's more optimistic scenario.

President Trump on Thursday signed an executive order prohibiting USA companies from doing business with WeChat, which will take effect in 45 days after the date of the order.

"However, the USA presidential election is approaching, and we think Trump may adopt more aggressive strategies for the election, including asking Apple to remove WeChat from worldwide App Stores".

WeChat is extremely popular with Chinese mobile device users, essentially operating as its own platform on top of iOS and Android for many users, and Kuo argues that a worldwide ban on WeChat in the ‌App Store‌ would be devastating due to the size of the Chinese market.

According to TF Securities International analyst Kuo Ming-chi, who gained prominence for his forecasts about Apple, the ban could have "the greatest impact on iPhone among Apple's products".

In addition to iPhone sales, Kuo adds that shipments for other Apple product lines such as AirPods, iPad, Apple Watch, and the Mac could decline by 15-25% in China too.

If it stands, the order would effectively force Apple to remove WeChat from the App Store.

Advocating that mobile applications developed by Chinese companies throw the national security of the United States of America on fire, Donald Trump does not want any U.S. company to work with these applications. Under this scenario, Kuo predicts Apple's global iPhone shipments would only fall between 3 to 6 percent.

That's not all. Since WeChat is imperative to the Chinese-Americans living in the United States for staying in touch with their folks back home, the WeChat ban could also affect iPhone sales in the country. Apple was recognized as the fastest-growing smartphone maker in China in the second quarter, during which iPhone sales jumped 225 percent, according to Shanghai-based CINNO Research. Anand Srinivasan, a Bloomberg Intelligence analyst, said losing WeChat would be a "serious hindrance" to its Chinese iPhone sales. But as the U.S. presidential election is approaching, Trump may use more aggressive tactics for the election, including requiring Apple to delete WeChat from its global app store. The analyst said that WeChat had become a daily necessity in China - it integrates messaging, payment, e-commerce, social networking, news reading, and productivity functions.

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