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In a worst-case scenario, Apple's annual global iPhone shipments could decline by 25–30% if it is forced to remove WeChat from its App Stores around the world, according to a new research note from analyst Ming-Chi Kuo viewed by MacRumors. The removal could occur due to a recent executive order aiming to ban U.S. transactions with WeChat and its parent company Tencent.

apple_wechat.jpg

Kuo lays out optimistic and pessimistic scenarios depending on whether Apple is only required to remove WeChat from the App Store in the United States or if the ban would apply to the App Store in all countries.

WeChat is extremely popular with Chinese mobile device users, essentially operating as its own platform on top of iOS and Android for many users, but the app is also widely used around the world and has over 1.2 billion monthly active users. Kuo argues that a worldwide ban on WeChat in the App Store would be devastating as a result.
Since 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. We estimate that global iPhone shipments will decline by 25–30%. Global shipments of other Apple hardware products, including AirPods, iPad, Apple Watch, and Mac, will decline by 15–25%.
Under his optimistic scenario in which WeChat is only removed from the U.S. App Store, Kuo predicts global iPhone shipments would be impacted by 3–6% with other Apple products being affected by less than 3%.

Apple does not break down its iPhone shipments by region, but overall, Greater China accounted for a little over 15% of Apple's total revenue during the June quarter, making it a significant part of Apple's business.

Kuo recommends that investors reduce their stock holdings of companies in Apple's supply chain such as LG Innotek and Genius Electronic Optical due to the risks of a WeChat ban. It does, however, remain to be seen what will happen as the prohibitions laid out in the executive order do not take effect until September 20. As a result, there is still time for the order to be clarified, modified, or rescinded.

Update 1: 10:36 p.m. This article originally stated that the 30% decline was in reference to Apple's total iPhone shipments, but the research note is not completely clear as to whether it refers to global or Chinese shipments. Given the Chinese share of Apple's overall sales, it seems more likely to be referring to Chinese shipments.

Update 2: 1:21 a.m. Kuo has informed MacRumors that the 30% decline is in reference to worldwide shipments and has issued an English version of his report that makes this clear.

Note: Due to the political or social nature of the discussion regarding this topic, the discussion thread is located in our Political News forum. All forum members and site visitors are welcome to read and follow the thread, but posting is limited to forum members with at least 100 posts.

Article Link: Kuo: Global iPhone Shipments Could Decline Up to 30% If Apple Forced to Remove WeChat From App Store [Updated x2]
 
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iZac

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Apr 28, 2003
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I know a lot of Chinese users have multiple Apple IDs for different regions, often because there are already apps that are only available on Apples' China App Store or conversely blocked on Apples' China App Store. I used to do the same ... until Apple moved their Chinese Data Centres to the Mainland.

The only difference for most Chinese users will be what account password they have to enter when they update their apps.

Personally I gently encourage my friends to use anything but Wechat and do all my financial stuff on Alipay. It would really hurt me if Alipay was pulled off the Apple UK App Store.
 
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WildCowboy

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From the actual quote, seems he was talking 30% to china, not 30% worldwide.
The note is translated from Chinese, but that doesn't appear to be the case. He seems to be addressing shipments in general, although he does not clearly specify. He would typically specifically say Chinese shipments if that's what he meant, and he does not say that anywhere in the note except for that single reference that's not specific to iPhone.

But I could be wrong.

Edit: I will make clear that it could be a possibility.
 

cmaier

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Jul 25, 2007
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The note is translated from Chinese, but that doesn't appear to be the case. He seems to be addressing shipments in general, although he does not clearly specify. He would typically specifically say Chinese shipments if that's what he meant, and he does not say that anywhere in the note except for that single reference that's not specific to iPhone.

But I could be wrong.

Edit: I will make clear that it could be a possibility.

Clear as mud.
 
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dingclancy23

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Nov 15, 2015
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Wechat is 100% of China. Apple could potentially lose all Chinese iPhone sales without WeChat. That 30% loss is worldwide.

Wechat is not just a messaging app. It is the de facto digital payment system. All personal transactions in China is done with WeChat. Chinese people will not be able to do business properly without WeChat.
 
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JPack

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Mar 27, 2017
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The note is translated from Chinese, but that doesn't appear to be the case. He seems to be addressing shipments in general, although he does not clearly specify. He would typically specifically say Chinese shipments if that's what he meant, and he does not say that anywhere in the note except for that single reference that's not specific to iPhone.

But I could be wrong.

Edit: I will make clear that it could be a possibility.

Kuo is definitely talking about global shipments. Many people seem to underestimate Chinese consumer demand for iPhones. China is one of the very few countries where you can live completely via digital. You can pay your utilities bill and register for a marriage certificate through WeChat. Without WeChat, consumers will simply move to Android.
 

yurc

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Aug 12, 2016
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Quite understanding this, in Japan equivalent if same if Apple remove LINE as example. Some region have default major preferred messaging platform which also transformed into more than just chatting function.

I rarely use WeChat, but sometimes still need to talk with some Alibaba manufacturer for faster response compared with standard email / Alibaba built in messaging system.
 
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WildCowboy

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Jan 20, 2005
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Kuo is definitely talking about global shipments. Many people seem to underestimate Chinese consumer demand for iPhones. China is one of the very few countries where you can live completely via digital. You can pay your utilities bill and register for a marriage certificate through WeChat. Without WeChat, consumers will simply move to Android.
The big question that gives me pause is how a market that only represents 15% of Apple's revenues could cause a 30% drop in iPhone shipments.

Understanding that it's only a rough guess that the overall revenue figure translates to China representing about 15% of iPhone shipments, it seems a stretch to think that even if every single person in China who would have purchased an iPhone switches to Android, an equal number of people elsewhere in the world would also have to be doing the same simply because of WeChat being banned in order to get to that 30% number.
 

lixuelai

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Oct 29, 2008
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Apple is not going to sell many iPhone in China without WeChat. Loss of 15% revenue is a lot higher as a % loss in profit since the cost of R&D is spread out among the total # of units sold.

Anyway doubt WeChat will be removed. You can bet Apple will start suing if there is a whiff that it may have to remove it from the global AppStore.

p.s. There is no way that it will only be a 25-30% drop in China, Kuo is definitely talking about a global drop. More like 95%+ in China and you will likely see an impact in other parts of SE Asia as well with large Chinese communities.
 
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lixuelai

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Oct 29, 2008
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The big question that gives me pause is how a market that only represents 15% of Apple's revenues could cause a 30% drop in iPhone shipments.

Understanding that it's only a rough guess that the overall revenue figure translates to China representing about 15% of iPhone shipments, it seems a stretch to think that even if every single person in China who would have purchased an iPhone switches to Android, an equal number of people elsewhere in the world would also have to be doing the same simply because of WeChat being banned in order to get to that 30% number.

Its easily explainable in that Apple does not offer as many services in China so it's revenue there is disproportionately in hardware.
 
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swm

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May 29, 2013
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not quite sure whether the executive order from mr. used car salesman (current leader of the free world they say) has the power and legitimacy to affect the “non free world”. the same way ban on twitter by PRC doesn’t apply to US, does it?
 
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