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Apple boosted by trade deal prospects

By HENG WEILI in New York | China Daily Global | Updated: 2019-12-14 01:51

Two women walk past an Apple store at a shopping mall in Beijing in June. [Mark Schiefelbein / AP]

One company that likely was relieved to hear the news of a possible trade deal between the US and China is iPhone maker Apple Inc.

Such a deal would include the cancellation of a 15 percent tariff on products made in China that was due to go into effect on Sunday. Apple products affected would include the iPhone, iPad and Mac computers.

"Getting VERY close to a BIG DEAL with China. They want it, and so do we!", US President Donald Trump tweeted Thursday morning.

The tweet helped reverse a decline in shares of the Silicon Valley tech giant, which closed Thursday at $271.46, up 69 cents, in Nasdaq trading. Apple's stock hit an intraday low of $267.78 earlier in the session.

Part of that share-drop could be attributed to a research note put out Thursday morning by Credit Suisse analyst Matthew Cabral, which estimated that iPhone shipments in China fell more than 35 percent in November even though China's smartphone market saw robust growth.

Cabral cited data released by China's Ministry of Industry and Information Technology.

"We recognize monthly data can be volatile, and the shift in launch timing (of the iPhone) versus last year is likely skewing year-over-year compares; however, the drop in November marks the second-straight double-digit decline (-10.3 percent year-over-year in October), and total shipments in China since the launch of the iPhone 11 family are now down 7.4 percent year-over-year (September to November)," the note said.

The chill in relations between the US and China over a range of issues such as trade, restrictions on Chinese telecom giant Huawei Technologies Co Ltd, visa difficulties and recent US measures supporting Hong Kong protesters likely gave some Chinese citizens pause about buying US products.

In fact, Huawei grabbed a record 42 percent of China's smartphone market in the third quarter, according to an October report by market research firm Canalys, Reuters reported.

Apple CEO Tim Cook has made it a point to meet with Trump, who toured an Apple assembly plant in Austin, Texas, last month, where the president said he was "looking at" providing a tariff exemption to the company.

"The problem we have is you have Samsung — it's a great company but it's a competitor of Apple and it's not fair if — because we have a trade deal with Korea, we made a great trade deal with South Korea, but we have to treat Apple on a somewhat similar basis as we treat Samsung," Trump said.

In an interview in Tokyo on Tuesday with the Nikkei Asia Review, Cook dispute the president's contention that too many Apple products are manufactured in China.

"We've created well over 2 million jobs in the US," said Cook. "The glass on this iPhone is made by Corning in Kentucky. Several of the semiconductors in the iPhone are made in the United States. There's enormous manufacturing happening in the US, just not the assembly of the final product."

On Wednesday, Wedbush Securities analyst Dan Ives had written that "Apple continues to be in the crossfire given its flagship iPhone manufacturing footprint in China", adding that Apple "more than any company out there has the most to lose if this tariff war does not see a truce".

The analyst estimated that a 15 percent tariff could add about $150 to the cost of the average iPhone.

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