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Apple and chip manufacturers do not abandon China in the US-China technological war

Apple does not abandon China

Over the past year, trade tensions between the United States and China have tarnished the sentiments of technology investors by clouding growth prospects for the US advanced technology sector. Tensions between the world's two largest economies are no longer limited to trade disputes. In recent months, the "technological cold war" has surfaced, but the American technology giant Apple (AAPL) does not seem ready to throw in the towel on the Chinese market.

Apple recently began trying to seduce Chinese consumers by inviting Chinese developers to create applications, Reuters reported. The company aims to expand its Services segment in the Chinese market, where sales of its Product segment have deteriorated over the past two quarters.

Apple and chip manufacturers do not abandon China in the US-China technological war

What is the plan?

The iPhone maker plans to train Chinese developers through lectures, workshops and networking sessions. In 2017, it launched a similar program for developers in India.

In the second quarter of fiscal 2019, Apple's Greater China segment, which also includes Taiwan and Hong Kong, fell 21.5% year-on-year (year-over-year). During the quarter, the company generated approximately $ 10.2 billion in revenue from Greater China, representing approximately 17.6% of its total revenues.

In comparison, the Americas, Europe, Japan and the rest of the Asia-Pacific region accounted for approximately 44.1%, 22.5%, 9.5% and 6.2% of Apple sales, respectively. Currently, Apple has nearly 2.5 million developers in Greater China.

The story of Apple so far in China

During the six months ended March, Apple's iPhone sales reached nearly 15.8%, while growth in its Mac segment dropped to just 2.6% year-on-year. The slowing demand for its products in the Chinese market has recently hurt Apple's product sales in China.

In recent years, China has become one of the main regions targeted not only by Apple, but also by other US technology giants.

US Broadcom (AVGO), Micron (MU), Advanced Micro Devices (AMD), NVIDIA (NVDA), Intel (INTC) and Qualcomm (QCOM) derive a large portion of their revenues from chip sales to smartphone manufacturers and other technology companies in China. The ongoing trade war between the United States and China has endangered their Chinese sources of income.

After the suspension of trade negotiations between the two countries in May, the Trump administration has banned China's largest smartphone maker, Huawei, from dealing with its US suppliers, including US semiconductor companies . As a result, the shares of these chip makers saw a selloff in May. During the month, Broadcom, Micron, NVIDIA, Intel, AMD and Qualcomm recorded value erosions of 21.0%, 22.5%, 25.2%, 13.7% and 0.8%, respectively.

Apple also dropped 12.8 percent in May after some media hinted that China was using patriotic rhetoric to urge consumers to avoid Apple products.

Nevertheless, due to increasing pressure from major US pressure groups, President Donald Trump has pledged to soften sanctions imposed on Huawei after meeting President Xi Jinping in Japan at the end of June. . After the meeting, US-China trade talks resumed, easing tensions between the two countries. However, uncertainty about their current technological warfare persists.

Today's stock market rally

Earlier today, the S & P 500 Index, the Dow Jones Industrial Average Index and the Nasdaq Composite Index had reached unprecedented highs. These solid gains came after Federal Reserve Chairman Jerome Powell testified before a US congressional committee and discussed the possibility of a lower interest rate later this month.

On Wednesday at 3:10 pm (ET), the S & P 500, Dow and Nasdaq indices rose 0.5%, 0.3% and 0.7% for the day.

At the same time, Apple grew by 1.1% and shares of NVIDIA, AMD, MU and INTC rose by 1.8%, 2.3%, 3.8% and 0.8%, respectively. In contrast, QCOM and AVGO were down 2.1% and 0.1%, respectively.

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