Qualcomm and Apple have obvious problems in China. The Chinese government is holding up approval of Qualcomm’s purchase of another semiconductor maker, NXP Semiconductors. It has that power because 65 percent of Qualcomm’s sales are in China. As a result of delays in approving that purchase, Qualcomm is having to lay off workers in the United States.
Apple’s Tim Cook had a clear message when he met President Trump–my entire manufacturing base is in China and China is one of my largest markets. We don’t think Trump is particularly sensitive to Apple’s potential problems. But Apple could be in big trouble if the U.S.-China trade dispute erupts. Its suppliers could suddenly raise prices or miss shipments. Its employees could suddenly demand big raises. The government could impose taxes or surcharges on every phone it makes in China. Apple is incredibly vulnerable.
But so are Intel, Microsoft, Cisco and IBM. Intel, for example, sells more semiconductors in China than it sells in the United States. Cisco has sold the routers that help the Chinese government maintain its Great Firewall, which blocks the communication of most Chinese with the outside world.
All these companies could face big shocks to the prices of their share, supply chains, sales and every other aspect of their presence in China. Tariffs are simply too blunt an instrument to apply because there would be many victims including these household-name tech companies.
