Apple suppliers in Hong Kong and China declined on Monday, after analysts predicted Donald Trump’s ban on WeChat could lead to a sharp drop in iPhone shipments, as the American technology giant may have to remove the popular app from its App Store.
On the mainland, Shenzhen-listed Luxshare Precision Industry, which derives 55 per cent of its income from Apple, plunged by as much as 7.7 per cent in early trading, before paring some of the losses, to close 2.3 per cent lower at 52.43 yuan. GoerTek, a producer of the AirPods wireless earbuds, fell 1.6 per cent to 38.01 yuan.
Hong Kong-listed AAC Technologies, which counts on Apple for 40 per cent of its revenue, dived 5.6 per cent to HK$57.8. AAC makes acoustic components for Apple’s iPhones, iPads and watches.
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Handset assembler BYD Electronic International, which analysts expect to start supplying Apple as soon as this year, plummeted 7.5 per cent to HK$31. Sunny Optical Technology, a maker of camera modules also expected to become an Apple supplier, retreated 2.8 per cent to HK$140.7.
US President Donald Trump issued an executive order last week banning any transaction related to the Chinese social media app WeChat and its parent firm, Tencent Holdings, starting 45 days from Thursday. This would have far-reaching consequences for Apple, analysts say, as the company generated 16 per cent of its US$59.7 billion revenue from the Greater China region in its third financial quarter.
“The US government’s blacklisting of WeChat would have the greatest impact on iPhone among Apple’s products,” said TF Securities International analyst Kuo Ming-chi, who has become famous for his accurate predictions about Apple’s product development, in a report published on Sunday.
In the worst case scenario, in which Apple would be forced to remove WeChat from its App Store globally, iPhone’s annual shipments could decline by 25 to 30 per cent as a result of the ban, Kuo said.
“As WeChat has become a necessity for life in China that incorporates functions from messaging to payment, digital business, socialising and news, we believe Apple’s product shipment in China would decline significantly if this came true,” he said.
In the most optimistic case, however, Apple may only have to remove the app within the US, which would translate into a slight decrease of 3 to 6 per cent in iPhone deliveries globally, according to Kuo.
Shares of Apple retreated by 2.3 per cent to US$444.45 in New York on Friday following the announcement.
The plunge marked a drastic change in sentiment, coming just days after the market was buoyed by Apple’s stunning financial third-quarter results. Investors piled into Apple suppliers listed in Hong Kong and China after iPhone sales were estimated to have soared in China by 225 per cent from the previous quarter by research firm CINNO.
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