An analyst from Goldman Sachs issued a note to clients suggesting that Apple's earnings could take a huge thumb if China were to take a tough stance as part of the growing US-China trade war.
Analyst, Rod Hall predicts that the fruit company's earnings could fall by as much as 29 percent.
Apple is committed to doing much more business in China and taking advantage of the great potential that exists in one of the world's major economies, but the company is already doing significant business in that region.
Apple's Chinese arm for business accounted for over 17 percent of revenue in the last quarter, which is about $ 10 billion in revenue. Goldman Sachs suggests that these revenues could drain significantly if China were to be reproduced in the growing saga by banning Apple's products in the region.
Should China limit iPhone output in any way, we do not believe that the company could change much iPhone volume outside of China at short notice. We believe Apple is close to its annual fast-paced new iPhone production ramp to prepare for new launches during the fall, so even a short-term impact on production can have long-term implications for the company.
As part of the note, Hall also admits that it would not only affect Apple if such a drastic decision was made. The analyst suggested that China's internal ecosystem from a technological perspective would also be influenced by a decision of that size and that such a decision could also affect local employment.
Apple may be a US company, but most of the company's supply chain exists in China, with all the iPhone hardware actually being assembled at Foxconn's facility in the country. HSBC Analyst Erwan Rambourg has also shared concerns about Goldman Sachs, resulting in Apple's price cut to $ 174.00 per share.
The reality is that we are only in childhood of the growing US -China trade war, which means that the playing field is largely unknown at the moment. Both countries have imposed import prices in recent weeks, suggesting that there is much more to come from this global saga.
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