In brief: While it looks as if Huawei could face huge losses due to the tension between the US and China, Apple could also see its bottom line take a hit if the Asian nation decides to ban its products in the country.
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.
https://www.techspot.com/news/80205-apple-profits-would-fall-almost-30-following-china.html
