Escalating trade war could see China banning the iPhone and Apple’s earnings plummet by 26 per cent

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Apple could lose 26 per cent of its 2020 earnings if China bans sales of the iPhone in the escalating US-China trade war, experts warn. 

Investment specialists say they move could be brought in as a retaliation to President Trump‘s orders last week to blacklist tech firm Huawei. 

The predictions come amid existing fears that the iPhone is struggling in China as the brand loses popular among its middle class. 

Nearly 20 per cent of Apple’s earnings came from China in 2018 while over 60 per cent of its iPhone sales also came from the country. 

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Apple could lose 26 per cent of its 2020 earnings if China bans sales of the iPhone (pictured) in the escalating trade war between the two countries, experts warn

The latest fears that China might retaliate in response to the Huawei trade ban are directly linked to an ongoing tariff war between Beijing and Washington.

Earlier this month the US blocked Huawei and its 68 affiliations worldwide from buying key parts from American companies without special approval by the USA. 

Washington said last week it would delay implementation of the ban for 90 days to allow Huawei to find suppliers.

Despite this, the US sanctions have already sparked a chain reaction among suppliers of digital devices worldwide.

Two of Japan’s top mobile carriers, KDDI and SoftBank Corp, announced a delay in releasing new handsets made by Huawei.

British telecoms companies EE and Vodafone are also putting on hold plans to sell new 5G mobile phones from the Chinese company. 

Even without hitting back, Apple’s products in China are falling out of favour with local consumers. 

In recent years, there has been a domestic shift among towards Chinese brands like Huawei and Xiaomi, as made-in-China brands improved their technological capabilities and gained global competitiveness. 

There is also a sense of patriotism that lends support to the country’s own brands, which, as a result of Trump’s recent actions, could further drive further the iPhone decline. 

While a 'longshot', it could be instigated in retaliation to President Trump's blockade on tech giant Huawei Technologies last week

While a ‘longshot’, it could be instigated in retaliation to President Trump’s blockade on tech giant Huawei Technologies last week

The predictions come amid already-existing fears that the iPhone is struggling in Chinese market as the brand loses prestige among the country's expanding middle class

The predictions come amid already-existing fears that the iPhone is struggling in Chinese market as the brand loses prestige among the country’s expanding middle class 

Krish Sankar, an analyst from Cowen, a financial services company, wrote: ‘Apple’s iPhone, iPad, and Mac systems are at risk of experiencing demand destruction due to collateral damage from the sales ban to Huawei. 

‘The perception that Huawei is being ‘unfairly punished’ could lead Chinese consumers ‘to retaliate as patriotism leads them to support domestic brands while products and services from U.S. companies fall out of favour.’ 

Mr Sankar called the ban on Apple a ‘very long shot’ in a CNBC interview where he also described Chinese consumer sentiments towards the US phone maker ‘a fluid situation’.

Asked where their loyalties lay, Mr Sankar said: ‘Their loyalties switch on the price of the device.

‘We saw in January there was a very anti-iPhone sentiment china that kind of changed in February when Apple gave a very sweet deal – there were some pricing cuts during the Chinese new year.’     

A number of global investment firms have made the same projections about Apple’s potentially risky year ahead in China, partly due to government retaliation risks and partly due to its waning prestige among China’s middle class consumers. 

Citi has reduced its stock projections for Apple from $205 (£162) from $220 (£175), due to what they called ‘a slowdown of Apple iPhone demand in China as China residents shift their purchasing preference to China national brands.’  

Morgan Stanley and Goldman Sach also projected loss of revenue for Apple in the region of 23 per cent and 29 per cent respectively. 

The US-China trade war sprouted when US President Donald Trump criticised China’s ‘unfair’ trading practices and launched an investigation into the Chinese trade policies in 2017.

It intensified when Washington more than doubled tariffs on $200 billion (£158bn) worth of Chinese products earlier this month and Beijing retaliated by imposing higher tariffs on $60 billion (£53bn) of US goods.

A trade dispute and tariff war between the US and China began last July following complaints The predictions come amid already-existing fears that the iphone is struggling in Chinese market as the brand loses prestige among the country's expanding middle class. from Donald Trump (pictured)

Earlier this month Donald Trump (pictured) blocked Huawei and its 68 affiliations worldwide from buying key parts from American companies without special approval by the USA

Trump’s recent orders on Huawei have meant leading mobile carriers and technology firms have ‘paused’ their business with Huawei to comply with the recent US trade clampdown. 

UK-based chip designer ARM have told their staff to ‘halt’ business with the Chinese telecoms firm while mobile operators EE and Vodafone have pulled Huawei’s phones from their 5G networks.

Telecom firms EE and Vodafone which are launching their 5G services this month and in July, respectively, have left Huawei out of their line-up of 5G smartphones.

EE said it had chosen to ‘pause’ the sale of Huawei 5G phones amid ongoing tensions between the US and the company.

They also confirmed the Huawei equipment it currently uses in its network infrastructure is in the process of being phased out.

Nevertheless, Huawei phones sales are growing globally and it unveiled its latest smartphones, the P30 and P30 Pro in March with impressive technologies. 

Huawei’s own founder and Chief Executive Ren Zhengfei told Bloomberg that not only was such retaliation on iPhones by Beijing against Apple Inc unlikely, he would oppose such a move.

When asked about calls from some in China to retaliate against Apple, Ren said that he would ‘protest’ against any such step.

‘That (Chinese retaliation against Apple) will not happen first of all and second of all, if that happens, I’ll be the first to protest,’ Ren said in the interview with Bloomberg.

He admitted that export curbs from Donald Trump will cut into a two-year lead built by Huawei over its competitors, but added that the company will either ramp up its chip supply or find alternatives to stay ahead in smartphones and 5G. 

HOW DOES THE HUAWEI P30 PRO COMPARE WITH THE IPHONE XS MAX AND SAMSUNG

 

 Huawei P30 Pro

 6.47in curved full HD+ OLED HDR display

Quad Leica engineered rear camera system, including 20-megapixel ultra wide angle lens, 40MP wide angle, 8MP, 5x optical zoom telephoto lens and time of flight (ToF) sensor, 32MP selfie camera

Enlarged camera sensors for brighter and clearer low-light photography 

Super Portrait mode photographs with multiple layers of bokeh (background blur)

 Facial recognition and in-screen fingerprint sensor biometric security 

 128GB and 512GB storage options  

 IP68 water resistance

 iPhone XS Max  

6.5in Super Retina OLED display

Dual 12-megapixel telephoto and wide-angle rear cameras, 7-megapixel

Front-facing camera

4K video recording at 24, 30 and 60 frames per second

Portrait mode selfies with bokeh effect (background blur)

Face ID facial recognition software

Wireless battery charging

Up to 25 hours talk time battery life

64GB, 256GB and 512GB storage options

IP68 water resistance

 Samsung Galaxy S10+

6.4in Quad HD+ Dynamic AMOLED Display

Triple lens rear camera system – 12-megapixel telephoto 

 Wide-angle lens and 16MP ultra-wide angle lens, dual 10MP selfie 

8MP RGB depth camera on the front

4K ultra HD video recording at 60 frames per second

Live focus photography with bokeh effect (background blur)

Facial recognition and in-screen fingerprint scanner biometric security 

128GB, 512GB and 1TB storage options

IP68 water resistance

 



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