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Apple's profits would fall by almost 30% following a China ban, says analyst

By midian182 · 27 replies
May 23, 2019
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  1. In a note to clients, Goldman Sachs analyst Rod Hall wrote that the Chinese market made up 17 percent of Apple’s sales in its fiscal second quarter and represents 29 percent of the company’s profits. Should the escalating trade war, which has seen President Trump raise tariffs on $200 billion of Chinese imports, result in China retaliating by banning Apple products from the mainland, Cupertino's net income would fall by more than $15 billion annually.

    In addition to the ongoing trade dispute that could see tariffs hiked on an additional $325 billion of Chinese goods, the US essentially banned companies from doing business with Huawei over perceived security threats. This has so far seen Microsoft remove Huawei laptops from its online store and Arm cut ties with the firm. There has been a 90-day reprieve allowing Google to continue providing security patches and software updates to Huawei devices, but it's unclear what will happen once it expires.

    Apple has another concern beyond a Chinese sales ban. Most of its iPhone manufacturing process takes place in Chinese factories, most notably at the Foxconn plant in Shenzhen that produces the majority of its handsets. Should restrictions be put in place, Hall believes Apple would be unable to move much of its iPhone manufacturing outside of China at short notice. It was previously reported, however, that Apple has already been considering moving away from the country due to rising tariffs on US imports.

    Hall added that China’s willingness to stop iPhone production in the country would likely be tempered by the effect such action would have on the local economy and tech ecosystem.

    Permalink to story.

    Last edited: May 23, 2019
  2. psycros

    psycros TS Evangelist Posts: 2,661   +2,415

    "It was previously reported, however, that Apple has already been considering moving away from the country due to rising tariffs on US imports."

    This is what you'll never hear in the mainscream media: America was already in a trade war with China, its just that we weren't fighting back. Apple needs to move the entirely of its operations to countries that don't artificially devalue their currencies and place huge tariffs on imports - in short, ones with actual free markets. Maybe they could even consider building some of their products in their home country.
  3. sac39507

    sac39507 TS Addict Posts: 248   +93

    I agree. These companies need to stop being greedy and take the loss for a greater cause. Trump has been the only president to have a pair to initiate this process. We need to stop being China's little slave dog.
  4. Lew Zealand

    Lew Zealand TS Guru Posts: 588   +481

    They did that, nobody bought it. The iTrashcan.

    Eh… Mac Pro or something.
    EndRessentiment likes this.
  5. QuantumPhysics

    QuantumPhysics TS Evangelist Posts: 1,148   +837

    Apple is a $1 Trillion dollar company.

    They could literally stop making iPhones and iPads right now and be just fine without them.

    I seriously doubt Trump's trade war will succeed, but let's say it did: You think Apple losing 30% profit will slow it down?

    Of course not.

    Profit is the money made AFTER net expenditures.

    They make so much profit already that a 30% cut would still have socialists complaining about their profits.

    In 2018, Apple (AAPL) said that it posted a $11.5 billion profit for the three months ending in June, up 32% from the same period a year ago. Apple's revenue increased 17% to $53.3 billion.

    Trust me...they'll be ok.
    Knot Schure, m4a4 and wiyosaya like this.
  6. wiyosaya

    wiyosaya TS Evangelist Posts: 3,823   +2,173

    crApple only has $400 bn in the bank. Poor crApple. :( crApple needs more money.
  7. Lew Zealand

    Lew Zealand TS Guru Posts: 588   +481

    iPads, sure. iPhones, well those are still Apple's #1 seller. With services revenue going up and iPhone revenue going down, they're diversifying in the right direction but removing iPhone sales would cut the heart out of the company.

    But yeah $400B in the bank is a rather nice nest egg. They don't need help from anyone.
  8. QuantumPhysics

    QuantumPhysics TS Evangelist Posts: 1,148   +837

    I’m sure you made more than them!
  9. p51d007

    p51d007 TS Evangelist Posts: 1,927   +1,196

    Here's an idea Apple...DROP the insane INFLATED price of your products and push more product, but less profit on each device sold.
    wiyosaya likes this.
  10. wiyosaya

    wiyosaya TS Evangelist Posts: 3,823   +2,173

    :facepalm: IMO, its comments like these that show that the priorities of the world are in the right place. After all, money is not only everything, but the only thing that matters at all.

    EDIT: just in case it was missed: /sarcasm
    TempleOrion likes this.
  11. wiyosaya

    wiyosaya TS Evangelist Posts: 3,823   +2,173

    crApple? Never.
  12. Markoni35

    Markoni35 TS Booster Posts: 120   +62

    How would they be(come) the most profitable tech corporation if they dropped the inflated prices?
  13. Lew Zealand

    Lew Zealand TS Guru Posts: 588   +481

    No chance. Profit margin has been a big shareholder talking point since the early iPod days. When it dips to the mid 30s the shareholders go nuts.
  14. PEnnn

    PEnnn TS Enthusiast Posts: 74   +73

    Everybody is giving Apple the evil eye because of "inflated prices". It's a free market system after all, nobody is forcing you to buy their stuff!!

    Have the Android fanboys looked at Samsung Android phones lately? A few years ago they were charging the same as Apple (now they charge even more) right when their Android phones were made of (mostly) plastic!!

    And if Trump The Unhinged is fighting a great tariff war with China....why is he giving US farmers 15 billion to compensate them (after having given them 12 billion already)...?? That's your money, by the way....not his.
    QuantumPhysics likes this.
  15. Knot Schure

    Knot Schure TS Addict Posts: 252   +109

    Scanning to see if I care....

    No care found.
    Dimitrios likes this.
  16. QuantumPhysics

    QuantumPhysics TS Evangelist Posts: 1,148   +837

    And now you understand why they inflate the prices of their devices so much.

    #1 People who want them will buy them. Period.

    #2 If and when you get a ***** president or some dictator trying to impose tariffs or sanctions, your previous profits make it so you can weather the storm until they get voted out of office, or deposed.

    After all, what are you gonna do? Go to Android?

    OK - go ahead.
  17. QuantumPhysics

    QuantumPhysics TS Evangelist Posts: 1,148   +837

    I continue to insist that apple iPhone does not "compete" with Android phones.

    Because of iOS, apple's devices stand alone.

    Meanwhile, Samsung is up against a bazillion other Android makers who have less-expensive devices and varying gimmicks with varying amounts of advertisement.

    Yes Apple competes for market share with Samsung and the rest...but they don't have to match Samsung or any of the others for features and they'll still come out ahead.

    Apple has cornered the market's profits by being different: iOS is a big deal.

    A consumer has dozens of Android makers to choose from.

    Only one Apple tho...
  18. koblongata

    koblongata TS Addict Posts: 181   +56

    Yes, move manufacturing back to America and pay high salaries to American workers! Apple should reduce it's crazy high profit margin and use that money to help American people!
  19. Nocturne

    Nocturne TS Addict Posts: 171   +87

    Well to be fair this is going to hit hard for a bit, however in the long run this will probably be better for all free markets, it had to be done at some point, Europe in particular went though a bad stretch of seeing it's manufacturing disappear over night.
  20. Nocturne

    Nocturne TS Addict Posts: 171   +87

    But they arent ahead, not any.
    All Apple has is it's iPhone and iPad that is it, the PC division is bust, has been for years.
    Fedoruccio likes this.
  21. QuantumPhysics

    QuantumPhysics TS Evangelist Posts: 1,148   +837

    Ummm...Apple is the most profitable company in the world.

    BUT YEAH - I'll differ to your professional analysis...:sleeping::sleeping::sleeping:
  22. Nocturne

    Nocturne TS Addict Posts: 171   +87

    Actually no they are not..Microsoft surpassed them, but besides that, they are a bubble that will eventually pop, the only ones that will get stuck are the *****s like the .com bubble, they have floated on perception and image..can't maintain that forever.
  23. Lew Zealand

    Lew Zealand TS Guru Posts: 588   +481

    Apple is more profitable than Microsoft. Microsoft has a higher stock value than Apple right now. However some Saudi Arabian state-run oil company is about 3x more profitable than Apple, so they're no longer #1 in profits worldwide.
    Nocturne likes this.
  24. Fedoruccio

    Fedoruccio TS Rookie

    Do not forget that all iPhone/iPad CPUs are manufactured in China at TSMC... Go to your supermarket more than half is made in China. Stupid move from Tramp.
  25. Fedoruccio

    Fedoruccio TS Rookie

    Yes PC aka Mac division is in total shame lately with all the CPU throttling due to the weak design (very bad cooling) + thos stupid bend-gates and faulty keyboards. I do not have high hopes for Mac Pro as well.
    Apple is also way too slow to update their Macs (all of them). IMHO, All they need to do is just release Mac motherboards for both Intel and AMD CPUs with full out of box support of Mac OS X... But it would never happen.
    Nocturne likes this.

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