Apple China Business Faces New Blow From Trump Huawei Ban

Apple China Business Faces New Blow From Trump Huawei Ban
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The U.S. crackdown on Huawei could make Apple’s already troubled business in China even more difficult, according to Bloomberg. Trump's ban 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 U.S. and China late last year, some economists said there was an informal boycott by Chinese consumers of U.S. products, including iPhones. After Apple reported disappointing holiday results, CEO Tim Cook said the trade war was partly to blame. Apple’s earnings would take a 29% hit if China were to retaliate against the U.S. with a ban on sales of the iPhone maker’s products, Goldman Sachs estimated.

Apple could lose nearly a third of its profit if China retaliated by banning its products, Goldman Sachs analysts estimated this week. 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. Apple shares were down less than 1% at 9:36 a.m. in New York.

Apple would face much more dire consequences if production restrictions were implemented in China, Goldman analysts led by Rod Hall wrote in a research 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.

There aren’t many customers in the U.S. for Apple to win back. But in other parts of the world, Huawei has become a thorn in Apple’s side. The Chinese tech giant had almost a quarter of the smartphone market in Europe in the fourth quarter, just behind Apple and Samsung, according to research firm Canalys. Globally, Huawei is the second-largest smartphone maker behind Samsung.