Apple Sales Will Weaken Even Without Tariffs, Analyst Claims

The current trade war between the U.S. and China has resulted in the U.S. government putting tariffs on goods that come from the Asian country. These tariffs effectively raise the prices of many of the things consumers normally use, including smartphones.

While the tariffs are expected to raise the prices of smartphones, an analyst believes that Apple, in particular, won’t be affected by it.

Bearish

CNBC reported that Rosenblatt Securities downgraded the Cupertino tech giant from “sell” to “neutral” not because of the aforementioned tariffs, but because of more pressing reasons. The institutional broker is bearish on Tim Cook’s company because of the slow growth in its production sales, and because it lags behind in 5G.

“[T]he reason [why] we downgraded Apple is not because of tariffs,” Rosenblatt Securities senior research analyst, Jun Zhang, explained on CNBC’s “Squawk Alley.” “I don’t think it matters too much,” Zhang added.

Zhang explained that Rosenblatt “expects” Cupertino to lower iPhone production for the December quarter because of weak sales. He added that Apple’s iPhone sales can be expected to remain weak whether or not the company raises or lowers selling prices in light of the tariff.

“We continue to believe that even without tariffs, Apple’s iPhone sales will continue to be weak,” he said.

The analyst also explained that Rosenblatt is bearish on the iPhone maker because it lags behind the competition when it comes to 5G. He said China is expected to become the largest 5G market next year, and that won’t be good for Apple because it doesn’t have any 5G offerings at the moment.

“When you look at next year, China is going to be the largest 5G market. That will leave Apple [to] continue [to lose] shares in China so I don’t think Apple’s 5G [network] will be heading next year,” Zhang said.

Bullish

On the other hand, Krish Sankar, an analyst from Cowen, noted that the issue with 5G won’t affect Apple in the U.S. because “we’re still very early in the 5G cycle.” Sankar said there’s little risk that people will switch to Android even if Apple’s 5G iPhone is delayed for nine to 12 months. Apple, Sankar believes, will perform well with its services like Apple TV +.