Trump's Tech War with China Could Cost Apple Dearly

Mish

Apple is about to lose a $44 billion market thanks to president Trump.

iPhone to Become "Electronic Trash" in China

Trump threatens to ban WeTalk. If he follows through, iPhone sales in China will drop to zero.

Please consider Apple’s $44 Billion China Market Threatened by Trump WeChat Ban

Apple Inc. spent years building China into a $44 billion growth driver. Then the U.S. president last week cast all that in doubt. IPhone loyalists across China are now reconsidering their attachment to the device after Donald Trump issued an executive order last week barring U.S. companies from doing business with WeChat, the super-app that has become integral to everyday life in the country. Scheduled to come into effect in roughly five weeks, the ban threatens to turn iPhones into expensive “electronic trash,” said Hong Kong resident Kenny Ou, who sees WeChat as one of the most essential software on his handset.

If Apple was forced to remove the service from its global app stores, iPhone annual shipments will decline 25% to 30% while other hardware, including AirPods, iPad, Apple Watch and Mac computers, may fall 15%-25%, TF International Securities analyst Kuo Ming-chi estimated in a research note. Apple didn’t immediately respond to Bloomberg News’ requests for comment.

Why Stop There?

With Trump, trade wars and threats of them never cease. 

After TikTok and WeChat, Alibaba Could be the Next Target in Trump's Tech War.

The United States has taken aim at some of China's biggest tech champions, from Huawei and ByteDance's TikTok to Tencent's WeChat. Alibaba, one of the world's largest retail and internet conglomerates, could be next.  

The company is on the minds of US officials. Secretary of State Mike Pompeo name-checked Alibaba last week when he urged American companies to remove "untrusted" Chinese-owned technology from their digital networks.

Certain to Cost Apple?

Yes. The real question is "How much?"

Even if Trump issues clarification banning WeChat only in the US, who should believe it? 

Nobody in their right mind trusts anything Trump says or does. 

This will not be resolved until after the election and we get some guidance from Biden, assuming Biden wins, as I believe likely.

For discussion, please see Biden is a Huge Favorite to Win the Election.

What Do We Call This?

Hopefully, you know the answer. 

We call this "Winning!"

Mish

Comments (74)
No. 1-22
Lance Manly
Lance Manly

"What Do We Call This?"

All time highs on the S&P 500. Why, I don't know.

Tony Bennett
Tony Bennett

Apple "investors" could care less.

Multiples expansion now at 35 ... for years under 20. Apple just announced another bond offering at $5.50 billion. Didn't bother to read it, but surely it .. is .. for .. stock buyback.

Only some old fogey putting pencil to paper would care about actual revenue / earnings. "Investors" only care about greater fool. With that in mind a multiple of 40? 50? Heck, lets just go all Amazon and have a triple digit one. Hoo cares??

anoop
anoop

Apple will be a $10T company within the next 3 years. It might even happen within 2.

Sechel
Sechel

Trump us thinking in terms of an election cycle. China thinks in terms of centuries. China will be fine. Apple will lose money short term. This all gets reversed quickly if Biden wins

nzyank
nzyank

What do we call this? "nauseating"

Heran
Heran

Name a war in which only side has casualties.

Zardoz
Zardoz

All the other countries are just waiting for us to put baby to bed so the adults can talk.

Soft_coding
Soft_coding

Can you address the V shaped recovery charts trump posted on twitter today?

awc13
awc13

watch wechat offer biden's son a board position

MiTurn
MiTurn

Crush Apple! Elitists.

njbr
njbr

V shaped recover based on the stock market rise?

The stock market is being driven by a few stocks.

Those few stocks are are of the few companies prospering in this crippled economy.

If the market is forward-looking, what is being predicted by the stock of those companies?

What is being predicted is that THE CRIPPLED ECONOMY IS HERE TO STAY. Maybe not forever, but too damn long.

If it were predicting a return to normalcy, the rise would be broader-based.

TimeToTest
TimeToTest

The general consensus is Trump is crazy. He is doing all this to destroy and enrich himself.

But what if he is not? What if he understands how the Chinese government is trying to install itself in America’s? What if we stop for a second and understand that he has vast amounts of information and is makes decisions off that information? What if this is the correct choice for the future of this country?

Casual_Observer
Casual_Observer

Trump going to the birtherism well again. When will social media start banning outright lies.

ksdude69
ksdude69

To be fair, considering Apple uses slave labor and has people jumping to their deaths making their crap for 50 cent and selling it for 1000 in the US I don't feel sorry for them in the least. But yeah, overall pretty stupid it's as if he doesn't expect the other side to retaliate? Everyone talks about Trumps 4d chess. Truth be told I bet he's a terrible 1D player because he only looks at his position. Instead it turns out being captures captures.

Augustthegreat
Augustthegreat

By banning TikTok in the US, about $30B is killed for TikTok (BTW many american investors are stakeholders). In retaliation by China, Apple alone will lose about 30% of its total revenues. Apple may also lose its manufacturing bases in China, reducing its productivity and thus product margin (China loses jobs). Overall Apple's stock valuation will probably decrease by 35-50%. With its current valuation of $2T, this loss in value is about $700B to $1T. tRump must be playing 5D checkers !

amigator
amigator

We have much bigger problems than WeChat or TikTok. I guess a nice distraction.

FromBrussels
FromBrussels

why would you americans actually give a shit about Apple with all its abroad factories, outsourcing and taxheavens ? ....oh yeah, how stupid : STOCK !

Cocoa
Cocoa

Well Mish, China doesn't allow Amazon or Google to function in China . China just copies the business model and awards the company to political friends. Is that fair to US software companies???

dr smock
dr smock

The Covid-19 virus started infecting Wuhan, China in late September, 2019, but China did not tell the world until January, 2020. When is China going to pay the US for infecting it with Covid-19? I think Trump is going to ask for war reparations for the planet.

dr smock
dr smock

Why did House Speaker Nancy Pelosi immediately call for a stop in the investigation of China's role in the Covid-19 virus earlier this summer? And why did Senator Dianne Feinstein, also worth hundreds of millions, also call for a stop to any investigation? Because it is good for "us" to help China grow.

MATHGAME
MATHGAME

RE: "Why did House Speaker Nancy Pelosi immediately call for a stop in the investigation of China's role in the Covid-19 virus earlier this summer?"

Some would say because nobody would be happy with what any thorough investigation would discover.

I keep on urging people to do as much research on the SARS-COV2 furin cleavage site as they can ...


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