Categories Analysis, Technology

Apple could get hurt in the fight against Huawei

The trade war between the US and China is raging on, and amid this, the US blacklisted a prominent Chinese firm, Huawei Technologies Co. Ltd, last week. Even though the US government has provided some temporary relief, the move has sparked outrage in China.

Now it appears this outrage might have a casualty in the form of Apple Inc. (NASDAQ: AAPL). Huawei has been getting plenty of support from Chinese users on social media with many declaring that they would ditch iPhones in favor of Huawei’s products.

While social media sentiment has a minor role to play in the field of hard-core business, a report by Bloomberg states that if China were to respond to the US with a similar ban on Apple’s products, it would hurt the tech giant’s earnings by 29%.

Earlier this month, a study by IDC showed that during the first quarter of 2019, Huawei surpassed Apple both on smartphone shipment volumes and market share. Huawei held a market share of 19% while Apple had only 11.7%. Huawei managed to grow its shipment volumes by 50% year-over-year while Apple’s shipments fell 30%.

Smartphone shipments and volume for Apple, Huawei, Samsung and Xiaomi

In its second-quarter 2019 earnings announcement, Apple said its sales declined 22% year-over-year in Greater China. China is Apple’s third largest market after the Americas and Europe and accounts for a meaningful portion of its revenue.

Apple already faces tough competition in China from Huawei and other local companies and the ongoing spat is likely to worsen the situation for the iPhone-maker in the region.

Apple’s shares were down 1.7% in afternoon hours on Wednesday.

Also Read:  Verizon Communications Inc. (VZ) Q2 2020 Earnings Call Transcript

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