Over the past week, tensions between the U.S. and the Chinese tech industry has intensified with President Donald Trump issuing an executive order that bans American companies from dealing with Tencent, the parent company of WeChat.
Bloomberg reports that a recent Weibo survey in China that sampled more than 1.2 million respondents, revealed that an overwhelming majority of Chinese iPhone users, 95% to be exact, would switch from Apple to another smartphone brand rather than give up WeChat.
With more than a billion users, WeChat is the single most important app in China. It has grown to become more than just a messaging app, as people use it to make in-store payments, transfer money to friends, ride-hail, order food deliveries and more.
According to the executive order signed by Trump, it blocks “any transaction that is related to WeChat. Though it is set to go into effect in five weeks, there is a lot of confusion about the intended reach of the ban.
It is not known whether the ban applies only in the U.S. or extends to all business dealings of American companies worldwide. Apple analyst Ming-Chi Kuo estimates that the ban would come at a tremendous cost to Apple.
If Apple were forced to remove WeChat from its global app stores, Kuo estimated that iPhone annual shipments could decline as much as 30%. This would also affect other Apple hardware including its AirPods, iPad, Apple Watch and Mac computers, with falls as much as 25%.
Conversely, if WeChat is only removed from the U.S. app store, Kuo said the negative impact on Apple will be significantly less. He estimated that global iPhone sales could be negatively impacted up to 6% while other Apple products could see fall in sales of less than 3%.
Still, China accounts for over 15% of Apple’s total revenue, making it a significant part of its business. So it comes to no surprise that Apple has warned the White House about the massive risk to its business should Trump follow through with a ban on WeChat. It said:
Apple is one of more than a dozen US companies who this week warned the Trump administration about the implications of banning WeChat from their platforms. The warning was given during a conference call on Tuesday.
Disney, Ford, Intel, Morgan Stanley, UPS, and Walmart were also among those to inform the White House that the consequences for US companies could be ‘severe.’