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WeChat removal could hit iPhone sales in China, analyst predicts

Chinese iPhone sales could decline up to 30 per cent if Apple is forced to remove WeChat from its App Store, an analyst has predicted.

The removal of the massively popular chat platform, owned by Chinese tech giant Tencent, could adversely impact iPhone sales in the country. 

Annual shipments of other Apple hardware devices, including AirPods, iPads and Mac computers, could also fall by a quarter. 

The prediction follows US President Donald Trump’s decision to ban WeChat in the US with an executive order, which takes effect from mid-September.

As a result of the decision, the US firm Apple may be forced to remove WeChat from its App Store.   

Chinese consumers could be put off from buying an iPhone if it doesn’t support the app, which has become an integral part of millions of Chinese phone users’ lives. 

Last quarter, Greater China accounted for about 10 per cent, or around $6 billion, of Apple’s total revenue, meaning Trump’s ban could backfire by depriving the US economy. 

‘WeChat has become a daily necessity in China, integrating functions such as messaging, payment, e-commerce, social networking, news reading, and productivity,’ said analyst Ming-Chi Kuo in a research note seen by MacRumors

‘If this is the case, we believe that Apple’s hardware product shipments in the Chinese market will decline significantly. 

‘We estimate that the annual ‌iPhone‌ shipments will be revised down by 25–30 per cent, and the annual shipments of other Apple hardware devices, including AirPods, iPad, Apple Watch and Mac, will be revised down by 15–25 per cent.’  

There is the possibility that WeChat is only removed from the US version of Apple’s ‌App Store‌, rather than all App Stores globally, including China.

In this former scenario, iPhone‌ shipments would be impacted by somewhere between 3 to 6 per cent and other Apple products would be affected by less than 3 per cent.                

Last week, Trump’s orders banned any US transactions with WeChat owner Tencent, a major Chinese company that owns shares in Tesla, Snap Inc and Reddit. 

Trump signed the orders using national emergency powers, which bar WeChat from the US after 45 days, as well as popular Chinese-owned video app TikTok. 

The order does not take effect until September 20, however, leaving time for the order to be modified or rescinded.  

According to Trump, the apps represent national security threats, which mirrors his reasoning for adding other Chinese companies – most notably Huawei – to its ‘blacklist’ of companies prevented from trading with US businesses.

The ban moves further away from the long-promoted American ideal of a global, open internet and could encourage other countries to follow suit, other analysts said.

‘It’s really an attempt to fragment the internet and the global information society along US and Chinese lines, and shut China out of the information economy,’ said Milton Mueller, a Georgia Tech University professor and founder of the Internet Governance Project. 

Daniel Castro of the Information Technology and Innovation Foundation said the US actions suggest ‘a serious risk of internet fragmentation’ if carried out.

‘The United States should be careful about arguing that there is an inherent national security risk of using technologies from foreign companies,’ Castro said.

‘If other countries apply that same logic, US tech companies will be locked out of many foreign markets.’ 

US social media platform Twitter has approached TikTok’s Chinese owner ByteDance to express interest in acquiring the US operations of the video-sharing app. 

Trump said he would also support Microsoft’s efforts to buy TikTok’s US operations if the US government got a ‘substantial portion’ of the proceeds.

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