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Apple Faces New China Risk

Sep. 06, 2023 4:00 PM ETApple Inc. (AAPL)78 Comments
Bill Maurer profile picture
Bill Maurer


  • Apple is preparing for its annual product launch event, where new iPhones will be showcased, but faces competition from Huawei's new Mate 60 smartphone series.
  • Huawei's new product release indicates a potential comeback for the company, which has been hindered by US sanctions in recent years.
  • Apple's potential growth in the Chinese market could be limited if Huawei's Mate 60 line proves to be competitive and gains strong sales.

High Risk of Business decision making and risk analysis. Measuring level bar virtual, Risky business risk management control and strategy.


Next week, technology giant Apple (NASDAQ:AAPL) will hold its annual September product launch event. This is the day where the newest set of iPhones will be shown off, helping to generate a good portion of the company's fiscal 2024

This article was written by

Bill Maurer profile picture
I am a market enthusiast and part-time trader. I started writing for Seeking Alpha in 2011, and it has been a tremendous opportunity and learning experience. I have been interested in the markets since elementary school, and hope to pursue a career in the investment management industry. I have been active in the markets for several years, and am primarily focused on long/short equities. I hold a Bachelor of Science Degree from Lehigh University, where I double majored in Finance and Accounting, with a minor in History. My major track focused on Investments and Financial Analysis. While at Lehigh, I was the Head Portfolio Manager of the Investment Management Group, a student group that manages three portfolios, one long/short and two long only. I have had two internships, one a summer internship at a large bank, and another helping to manage the Lehigh University Endowment for nearly a year. Disclaimer: Bill reminds investors to always do their own due diligence on any investment, and to consult their own financial adviser or representative when necessary. Any material provided is intended as general information only, and should not be considered or relied upon as a formal investment recommendation.

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Comments (78)

davel profile picture
So much for the China risk of new phones. There is a 5 week wait fir the new phones
madbeachman profile picture
I missed the move in Apple exactly because I feared losing all the profits from China. Should have been in but I would get out now. China has over 280M iphones. Huawei could not replace all those phones at once so the rollout starts with Gov employees. Once the phones are ready the bans will expand.
There is already a law in place to use only Chinese phones within 2 years.
Investor since ‘73 profile picture
@madbeachman No foreign company has ever been allowed to make a significant profit from selling their products in China. Their trade policy has always been a one way affair and even their companies only profit by exporting their goods. It’s a dead end.
davel profile picture
@Investor since ‘73
And yet apple and Tesla among others have been doing exactly that..
Investor since ‘73 profile picture
@davel The profits made by Apple and Tesla from manufacturing in China have predominantly been as a result of EXPORTING those goods, domestic sales in China are paltry.
Apple is about to learn a very expensive lesson on how doing business in a central planning market is not actually a free market. Huawei is going to get every break and nod to take market share away in the domestic mainland market, and there is nothing Apple can do about it. It is already blessed. Apple shareholders, if there is ever a time to voice loudly to management about picking up the pace in diversification, now is the time!
Investor since ‘73 profile picture
@17072452 China is about to learn a lesson of it’s own. Xi skipped the G20, smug arrogance believing he holds all the cards.

The advantage of cheap labor shrinks with every leap in automation. Factories quickly become obsolete.

The cost of shipping finished goods half way around the world gets more expensive too.

China’s profits depend solely upon exports, their domestic consumption is a fraction of their production.

There is no shortage of alternatives for what cheap labor is still needed. India, Vietnam, Mexico, Spain, the list is endless.

The US has been reaching out to Xi for months, sending the Sec of State and Commerce Sec In an effort to improve relations. It’s clear that banning Apple phones is his response to diplomacy.


I believe that within 2 years Xi and the Chinese economy will be in rapid decline, to the benefit of most of the rest of the world.
MichelleConnor profile picture
@Investor since ‘73 Not sure if China desperately needs a declining USA in its global trading as ASEAN alone has already become a bigger trading partner. What do we have to sell to China? Debt, democracy in our own definition, or rules of law we set?

Xi certainly would like to meet some global leaders at G20 (indeed he just did days ago at the BRICS meeting), but not a puppet arrogantly calling him a dictator. It is all propaganda hidden there like in the AP news, but people just don't realize the other side has the equal right and in probably a better position.
Investor since ‘73 profile picture
@MichelleConnor Well, we will see what happens in the next few years. The world is waking up to the realization of the threat China represents with their military cyber operations targeting corporation’s intellectual property and other nations security. I believe the one way street that is doing trade with China is coming to an end. All nations want their people to have jobs, the pendulum is swinging away from China.
Rasmus Tolppanen profile picture
I don't think Huawei is able to compete properly with Apple just yet in China. Reports are that Huawei was able to use pre-ban memory chips from SK Hynix. They most likely run out of supply sooner or later unless they manage to get the same tech from somewhere else. I see a lot of fearmongering from Americans because of this ban, but let's not forget that the US banned Huawei first, and limited the exporting of advanced chips to China.This just playing back and forth. Two of the biggest economies in the world need each other in order to achieve success.
The Emperor has spoken. Apple has lost the "Mandate of Heaven". And, Huawei is a strategic CCP asset. Chinese consumers are very attentive to pronouncements of the CCP. And, in the digital verse the Mountains are no longer High; nor, the Emperor far away.

And, for those 250,000 employees that are making Apple products. They can make Huawei products also. Tim Cook hung around too long.
Propaganda moves markets.
MaritimeTrader profile picture
AAPL indirectly employs like 250K ppl in China. Gvt will be treading carefully to not upset the apple cart too much.

Just the Millionaire next door profile picture
@MaritimeTrader More like 1 Mil.
Investor since ‘73 profile picture
Apple’s reliance upon China for the bulk of it’s manufacturing is literally my only concern about owning the stock, which I do. We need to recognize the sinister dictatorship that runs China with an iron fist as the enemy of America and the west that it is. Ironically, Sun Tsu wrote “The Art of War” in the 6th century BC and it’s a text still taught at West Point. The first rule is to know and recognize the enemy. If you don’t see it coming and are unprepared, you literally cannot win.

China is known to fund a dedicated military cyber operation that is focused on stealing intellectual property and use social media to rip off American businesses and threaten our national security. The faster Apple is able to shift production out of China, the better.
@Investor since ‘73 where’s Apple gonna ship manufacturing to? Do you know the history of the Chinese vs. India or Mexico?
Investor since ‘73 profile picture
@jason1544 Times change. India produces some very brilliant engineers and scientists, illustrated by their successful lunar landing. I live in rural California wine country and the Mexicans working in the vineyards here would all be driving Ferraris if hard work was rewarded fairly. They are the hardest working people I’ve ever seen.
MichelleConnor profile picture
@Investor since ‘73 Obviously you never saw people working in China.
ALL in, once in a life time opportunity
Is it true that when countries trade with each other that the chance of conflict declines ?
Investor since ‘73 profile picture
@Proxima Yes but we have allowed ourselves to be sucked into the one way street that is trading with China. They erect impenetrable barriers to goods produced in the US while taking advantage of our naive thirst for cheap goods produced in China, destroying our working class in the process.
@Investor since ‘73 Thank you investor 73 for sharing some interesting insights and what do you think the solution is to improved trade with China ?
Investor since ‘73 profile picture
@Proxima I would suggest a trade policy that is equal for all of our trading partners. That would be a reciprocal policy that is exactly equivalent to what the other nation imposes on our goods. If they require that they own 51% of the facilities, so do we. If they require that we give up our patents, so do they. Whatever barrier to entry or sales, exactly reciprocal.
SaaS Sniper profile picture
The China risk isn't new... Come on now.
Just the Millionaire next door profile picture
@SaaS Sniper Exactly. CCP did same thing to Tesla and they have done fine.
Other Side Of Trade profile picture
@Just the Millionaire next door Really? Govt employees can't drive Teslas? I hadn't heard that.
Give me some apples at 150 please....I am hungry for more

The WEAK YUAN IS HEADED TOWARDS 8.5 to 9.1 to the DOLLAR, as multiple stimulus measures have FAILED…..$$$$$


They have no idea what it’s worth as the property market continues to implode…..$$$$$
101VET profile picture
China is on a wartime economy now. You keep thinking that lower stock value hurts the CCP. There’s nothing the CCP would love better than to tank the US economy apples a good start. Xi would gladly sacrifice China’s economy if he could take down the big US behemoths. He knows as soon as the conflicts are settled the US companies will come running back, begging.
Investor since ‘73 profile picture
@101VET The advantage of cheap labor is drawing to an end more quickly with each improvement in automation, while the cost of shipping goods half way around the world keeps increasing. The sooner corporations realize that doing business in China is a one way street, leading into a dead end as their technology is ripped off, the better.
It is somewhat usual that narrow bans and labeling only help market addictive products. Think of your favorite addictive product and you will see it.

A blanket or broad ban is the illegalization of something and that is totally different.

So, I would not be surprised if it turns out that the CCP actually end up marketing the iPhone with this move.
Isn't the real geopolitical issue whether China is so threatened by AAPL's ecosystem and its attendant commitment to privacy and empowering its users?
My estimate is that the sales of iPhones in China will likely drop by 40% due to the return of Huawei as well as the use restrictions.
RockSolidInvestment profile picture
@Sehnah in the courts it is called speculation
I object!!
All*AAPL profile picture
@Sehnah: "My estimate is that the sales of iPhones in China will likely drop by 40% due to the return of Huawei as well as the use restrictions."

**Thanks for sharing your "estimate" with us...we AAPL Longs were waiting patiently for it...and from now on, all future investment decisions will be based solely on your "estimate".
Todays news was just an excuse to get people to give up their shares so that big money can buy them cheaper. It worked. They will run it back up to all time highs whenever the fed signals they are done. Try to see it for what it is.
This is a dog with fleas. Gonna be a money pit with no bottom for the next decade.
Both the mate 60 and CCP ban are non event for Apple. It does make for great business news and traders who needs some volatility.

When one digs deeper the mate 60 is a lost leader. The chip making process is based on previous generation and takes triple printing to create the chip. The Yield on this process is unknown and being who they are we will not know. As much as the press like to push the narrative. The technology is at 2020 level if you really want to compare.

As to the CCP, who knows and can anyone care about it. Apple sales in china is organic and consumer oriented. The 20% sales will remain and I would not be surprise sales will grow with iPhone 15.

These type of news always come out at this time of the year.
@michae1601 be careful when you read white nationalist stuff like this

US gov wouldn’t be concerned if Huawei phone wasn’t a contender!
Just the Millionaire next door profile picture
@newbienik CCP and WSJ are not creditable news sources.
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