Analysts at Citi dropped their outlook on Apple this week over worries that the ongoing trade war between China and the U.S. could affect Apple’s sales in the country. According to the analysts, a boycott could drop Apple’s sales in the country by 50 percent.
Business Insider reports that analysts at Citi believe that the trade war with China could negatively affect Silicon Valley giant Apple as Chinese citizens boycott the company over the treatment of Chinese tech firm Huawei. Analysts predicted that Apple’s brand in China has already been damaged and that while China accounts for 18 percent of Apple’s sales, that figure could easily be halved in the coming months.
Citi analysts wrote in an analyst note: “We are proactively slashing our iPhone unit sales as we believe the US/China trade situation will result in a slowdown of Apple iPhone demand in China as China residents shift their purchasing preference to China national brands.” The note continued to say: “Our independent due diligence now shows a less favorable brand image desire for iPhone and this has very recently deteriorated.”
Analysts did maintain a “buy” rating on Apple stock, but did drop the target price for Apple shares from $220 to $205 and warned investors that this figure could drop lower. Citi analysts stated that Apple could see a slight bump in sales due to uncertainty surrounding Huawei’s licensing of the Android mobile operating system, which Google may revoke access to. But, analysts believe that it’s quite likely that other smartphone makers such as Samsung will fill the market left behind by Huawei in that situation. Even if Apple did receive a sales bump, its believed it would only be a modest five percent increase in phone unit sales.
Chinese social media has reportedly been dominated by talks of Huawei’s situation in the U.S. with users of Chinese microblogging website Weibo calling for a direct boycott of Apple. Similar threats of an Apple boycott were made following the arrest of Huawei CFO Meng Wanzhou in December. At the time, the Nikkei Asian Review reported that some Chinese employers were even considering confiscating Apple iPhones from employees and punishing those who purchased them.
In an earnings call last month, Apple CEO Tim Cook noted that Apple sales appeared to be doing well in China and highlighted the “improved trade dialog between the United States and China” as a possible reason for this; since then trade relations have become significantly tenser.
Lucas Nolan is a reporter for Breitbart News covering issues of free speech and online censorship. Follow him on Twitter @LucasNolan or email him at lnolan@breitbart.com
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