A recent executive order from US President Donald Trump could seriously affect Apple’s future iPhone shipments and sales. Analyst Ming-Chi Kuo released a research note which outlined the situation, pointing to the importance of WeChat in countries like China and the effects of a ban of the app from the Apple app store. Trump’s executive order regarding WeChat was signed on August 6, 2020. Kuo estimates global iPhone shipments could fall by 25-30%.
Donald Trump’s “Executive Order on Addressing the Threat Posed by WeChat” included the following text. “To deal with this threat, the order prohibits, beginning 45 days after the date of the order, to the extent permitted under applicable law, any transaction that is related to WeChat by any person, or with respect to any property, subject to the jurisdiction of the United States, with Tencent Holdings Ltd., Shenzhen, China, or any subsidiary of that entity, as identified by the Secretary of Commerce under section 1(c) of this order.”
The note sent by Kuo suggested that because WeChat is “very critical to Chinese users, integrating communications, payments, e-Commerce, social software, news reading, and productivity functions, we believe that the move will tank iPhone shipments in the Chinese market.” This is a major deal for Apple, and the future of the company.
Per the Kuo note, Kuo (and TF International Securities) estimate that “global iPhone shipments will decline by 25-30%.” Kuo futher estimated that Apple hardware products of other sorts (AirPods, iPad, Apple Watch, Mac), “will decline by 15-25%.”
There is a possibility the order could be overturned or could only affect the USA bit of the Apple app store. The more likely situation is that Apple will be ordered to remove WeChat from all parts of their business, starting with all bits of their app store.
The executive order’s date suggests that the cut-off date is September 20, 2020. The next United States presidential election date is November 3, 2020.