Apple's profits would drop nearly 30% if China banned its products, according to a Goldman Sachs report.
Analyst Rod Hall notes that China represents 17% of the company's revenues but 29% of its profits due to the high-margin products sold in the country. Based on a gross margin of 45%, Goldman says net income would be reduced by over $15 billion annually.
"Investors have been asking us about Apple's financial exposure to China given the possibility of a ban on Apple's products there in retaliation for the US license requirements for Huawei that were announced last Friday," wrote Hall.
Additionally, Apple could face serious risks if China moves to block iPhone production in the country.
"Should China restrict iPhone production in any way we do not believe the company would be able to shift much iPhone volume outside of China on short notice, though actions that would push Apple production outside of China could have negative implications for the China tech ecosystem as well as for local employment."
Apple has already experienced a decline in demand from Chinese customers as competition from rivals like Huawei grows stronger; however, things could get significantly worse if the company gets caught in a trade war between the U.S. and China.
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[via BusinessInsider]
Analyst Rod Hall notes that China represents 17% of the company's revenues but 29% of its profits due to the high-margin products sold in the country. Based on a gross margin of 45%, Goldman says net income would be reduced by over $15 billion annually.
"Investors have been asking us about Apple's financial exposure to China given the possibility of a ban on Apple's products there in retaliation for the US license requirements for Huawei that were announced last Friday," wrote Hall.
Additionally, Apple could face serious risks if China moves to block iPhone production in the country.
"Should China restrict iPhone production in any way we do not believe the company would be able to shift much iPhone volume outside of China on short notice, though actions that would push Apple production outside of China could have negative implications for the China tech ecosystem as well as for local employment."
Apple has already experienced a decline in demand from Chinese customers as competition from rivals like Huawei grows stronger; however, things could get significantly worse if the company gets caught in a trade war between the U.S. and China.
Please follow iClarified on Twitter, Facebook, or RSS for updates.
[via BusinessInsider]