Ming-Chi Kuo: US WeChat ban could cause iPhone shipments to fall by up to 30%

The US government's blocking of WeChat, which has the biggest impact on iPhones among Apple hardware products, may force Apple to remove WeChat from the App Store, Tianfeng International analyst Ming-Chi Kuo said in a report released late Sunday. 

US President Donald Trump has signed an executive order banning US companies from doing business with WeChat, which will take effect in 45 days.

Apple removed WeChat from the Indian App Store in response to the government's request, so it wouldn't be a surprise if the US government asked Apple to remove WeChat from the App Store, Kuo said. 

WeChat has become a necessity in China, with functions such as messaging, payment, e-commerce, social networking, news reading and productivity. So if that's the case, we could see a significant decline in Apple's hardware shipments in China, Kuo said. 

In Kuo's view, the most pessimistic scenario for a US ban on WeChat is that Apple will have to remove WeChat from its global App Store, while the optimistic scenario is that Apple will only remove WeChat from its US App Store.

The pessimistic estimate is a 25-30 percent drop in iPhone shipments and a 15-25 percent drop in annual shipments of other Apple hardware devices, including AirPods, iPads, Apple Watch and Macs, Kuo predicts.

Optimistically, the negative impact on iPhone shipments is estimated at 3-6%, while other Apple hardware devices, including AirPods, iPad, Apple Watch, and Mac shipments are revised down by less than 3%, Kuo predicts.

Kuo recommends investors reduce their holdings of at least certain Apple supply chain stocks to reduce portfolio risk.

He added that in theory, the US government should not make decisions that are unfavorable to Apple. But with the US presidential election looming, it's possible that Trump will use more aggressive tactics for the election, including asking Apple to remove WeChat from the global App Store.