While Tencent (OTCPK: TCEHY) plays off the recent moves from Washington, soon saying that WeChat (for international users) and the major revenue driver Weixin (for Chinese customers on the mainland) are two separate products, more US action may be on the table .
The executive orders against TikTok (BDNCE) and WeChat could be “broader” than just those two apps, according to Secretary of State Mike Pompeo, adding that “American data will not end up in the hands of an opponent like the Chinese Communist Party.”
That could have far-reaching consequences. As Apple (NASDAQ: AAPL) is forced to remove WeChat from its global app stores, annual shipments of iPhones will decrease 25% to 30%, TF International Securities analyst Kuo Ming-chi wrote in a research note.
Go deeper: More than a dozen major U.S. multinational corporations raised concerns about the WeChat order this week in an interview with White House officials, including Ford (NYSE: F), Walmart (NYSE: WMT), Disney (NYSE: DIS), Procter & Gamble (NYSE: PG), Intel (NASDAQ: INTC), MetLife (NYSE: MET), Goldman Sachs (NYSE: GS), Morgan Stanley (NYSE: MS), UPS (NYSE: UPS) and Merck (NYSE: MRK).
The recent trade war, which has spiraled into a tech war, has also seen a shakeup of the global supply chain.
Hon Hai Precision Industry, a major supplier to Apple also known as Foxconn (OTC: FXCOF), is gradually adding more capacity outside China. The out-of-country share is now at 30%, up from 25% last year in June, and the ratio will increase as the company tries to avoid rising rates on Chinese-made goods to US markets.
“It does not matter if it is India, Southeast Asia or the Americas, there will be any ecosystem of production,” President Young Liu told investors, adding that although China will still play a key role in the manufacturing empire of Foxconn, the country will “days when the world factory is ready.”
