If Apple is forced to remove China’s popular WeChat app from the App Store globally, worldwide iPhone shipments could decline by as much as thirty percent.
That’s according to TFI Securities analyst Ming-Chi Ku.
In his letter to clients this morning, obtained by MacRumors, 9to5Mac and AppleInsider, the revered Apple analyst explained such a major drop in iPhone shipments would stem from the fact that WeChat is the most popular smartphone app in China. And China, with its population of 1.44 billion people, accounted for about fifteen percent of Apple’s total June quarter revenue.
Created by China’s conglomerate Tencent, WeChat is a multi-purpose app that combines messaging, social media and mobile payment functionality. Because this super app implements a wide range of functions, it’s become critically important to uses in China.
Here’s an excerpt from Kuo’s note to clients:
WeChat has become a daily necessity in China, integrating functions such as messaging, payment, e-commerce, social networking, news reading and productivity. If this is the case, we believe that Apple’s hardware product shipments in the Chinese market will decline significantly.
For context, WeChat currently has more than 1.2 billion users worldwide.
We estimate that the annual iPhone shipments will be revised down by 25–30 percent, and the annual shipments of other Apple hardware devices, including AirPods, iPad, Apple Watch and Mac, will be revised down by 15–25 percent.
If the US government forces Apple to remove WeChat only from the US App Store, global iPhone shipments would decline between three and six percent.
The best-case scenario is that Apple will only remove WeChat from the App Store in the US. If this is the case, the negative impacts will be on WeChat users who are in the US mainly. We estimate that global iPhone will decline by 3-6 percent. Global shipments of other Apple hardware products, including AirPods, iPad, Apple Watch and Mac, will decline by less than three percent.
As you know, US President Donald Trump recently signed an executive order banning all US transactions with WeChat. Here’s another excerpt from Kuo’s note to investors:
We think the executive order implies that Apple will have to remove WeChat from the App Store. Apple removed WeChat from the App Store in India in response to a government request. Therefore, we won’t be surprised if the US government asks Apple to do the same thing.
It is no secret that Chinese authorities analyze and track user activity on WeChat as part of the country’s mass surveillance network. As a matter of fact, data transmitted by WeChat accounts registered outside of China is also surveilled and used for censorship algorithms in China.
Theoretically, the US government will not hurt Apple. However, the US 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.
As if that weren’t enough, the Trump administration apparently wants to ban another popular smartphone app hailing from China, TikTok. However, TikTok’s owner allegedly intends to sue the Trump administration, NPR reported today, as well as challenge Trump’s executive order to ban TikTok from the United States if the sale to Microsoft doesn’t happen by September 15.
This is all part of the government’s Clean Network initiative designed to prevent Chinese apps and telcos from accessing sensitive information on American citizens and businesses.
What do you make of all this?
Let us know in the comments down below.