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This article was published on May 23, 2019

China could hurt Apple profits by 29% if it avenged the Huawei ban, says analyst

China could hurt Apple profits by 29% if it avenged the Huawei ban, says analyst
Napier Lopez
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Napier Lopez

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Napier Lopez is a writer based in New York City. He's interested in all things tech, science, and photography related, and likes to yo-yo in Napier Lopez is a writer based in New York City. He's interested in all things tech, science, and photography related, and likes to yo-yo in his free time. Follow him on Twitter.

Trump’s Huawei ban was bad news for China, as it effectively crippled the world’s second-largest smartphone maker from its largest source of income. But China is also very much in a position to retaliate, and Apple – the world’s third-largest smartphone maker – could be among the ones to suffer.

Goldman Sachs analysts estimated in a note to investors that Apple could lose 29 percent of its profits if China decided to ban Apple sales in the country to retaliate against the Huawei ban in the US. 17 percent of Apple‘s sales come from China, so such a move would undoubtedly be debilitating. Mind you, this is a theoretical scenario and China has no to ban Apple beyond politicking as far as we’re aware – though you could say the same about the Huawei ban.

On the other hand, the 29 percent figure is only an estimate of Apple‘s losses should device sales in be halted. Apple products are also, you know, built in China.

If the country decided to inhibit the phone’s production, Apple would face much more difficult immediate consequences. Such a move would likely be ill-advised in the long term as “it could have negative implications for the China tech ecosystem as well as for local employment,” note the Goldman analysts, but it’s a scary possibility for Cupertino – not to mention the myriad of other American companies building their products in China. For its part, Apple has considered moving manufacturing outside of the country due to rising tariffs, but that’s a lot easier said than done.

As consumers, the best we can hope for is that the US and China make up soon. Otherwise, this trade war could have a major adverse effect on the tech landscape.

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