Moscow, may 22 — “Lead. Economy.” The escalation of the trade conflict between the US and China could cause a serious blow to Apple’s profits, if China will respond with a ban on the products of American corporations, CNBC reports, citing Goldman Sachs analyst.
Photo: EPA-EFE/JUSTIN LANE
Analyst Rod Hall warned in a note to clients that Apple’s earnings could fall by 29% if the company’s products will be banned in mainland China.
The share of Chinese business, Apple accounted for over 17% of sales in the second fiscal quarter. The company annually sells in China iPhone worth billions of dollars.
“If China somehow will limit production of the iPhone, we do not believe that the company will be able to quickly transfer a significant amount of iPhone outside of China,” said Hall.
He also noted that “technological ecosystem” of China and local employment may suffer if Apple products will be banned. A large part of the supply chain, Apple is in mainland China, including the final Assembly of the iPhone, which is performed at the enterprises of Foxconn.
The escalation of the trade conflict between the two largest economies in the world happened after another round of talks ended in failure on may 10. The United States raised import duties on Chinese goods worth $200 billion with 10% to 25%. In addition, Washington began preparing for the introduction of increased import duties on Chinese goods another $300 billion
China in turn announced the introduction of high duties on American products worth $60 billion as of 1 June.
As reported “Vesti. Economy”, Chinese users have decided to respond to the actions of the US call to boycott Apple products. The social network Weibo users began a massive campaign, comparing the iPhone with smartphones, Huawei, and noting the advantages of Chinese brand. Many users expressed willingness to change iPhone on the “Patriotic” smartphone.
This is not the first case of attempts to boycott Apple. In December, some Chinese companies threatened layoffs of its employees, who use the iPhone. At the same time, for employees who plan to abandon Apple smartphones, employers offer lucrative subsidies on purchase of Huawei smartphones as an alternative.
In the II quarter of 2019 fiscal year ended March 30, revenues U.S. corporations decreased by 5% compared to the same period last year and amounted to $58 billion and International sales accounted for 61% of quarterly revenue.
Apple’s net profit dropped 10% to of $2.46 per share.
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