The ongoing trade war between the United States and China could have a devastating effect on Apple, should China decide to retaliate and ban Apple sales in that country, to the tune of 29% of earnings per share.
That’s the opinion of Rod Hall, an analyst for Goldman Sachs, who sent a note to investors Tuesday outlining his concerns.
The United States has banned Chinese tech giant Huawei from doing business here, which has had a ripple effect. Google said it would stop supplying its Android software to the company, forcing Huawei to come up with an alternative. In addition, mobile carriers in Japan and Great Britain have dropped the coming 5G edition of a new Huawei phone from their upcoming 5G launches.
So many analysts are questioning whether China will take a similar action toward one of the top tech companies of the U.S. Most parts for the iPhone originate in China, and the devices are assembled there.
Apple traditionally releases new iPhone models in the fall, and they would have to begin production later this year.
“Should China restrict iPhone production in any way, we do not believe the company would be able to shift much iPhone volume outside of China on short notice, though actions that would push Apple production outside of China could have negative implications for the China tech ecosystem as well as for local employment.”
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Several companies have moved production from China, due to President Donald Trump’s tariffs, which could add 25% to the cost of goods. GoPro, for instance, is shifting production to Mexico for its action cameras, as has toymaker Hasbro.
In a press conference with local media, Huawei CEO Ren Zhengfei defended the company. “I think we should not be the target of US-led campaigns just because we are ahead of the U.S. 5G is not an atomic bomb; it’s something that benefits society.”
USA TODAY has reached out to Apple for comment.
Apple sent out invites to the media Wednesday to cover its annual Worldwide Developer’s Conference, June 3 in San Jose, California. At WWDC, Apple gives updates on its business and looks to hype up the attendees, the people who create popular apps for the iPhone and iPad.
Follow USA TODAY’s Jefferson Graham (@jeffersongraham) on Twitter, Instagram and YouTube.
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