US WeChat ban to deal devastating blow to LG, Samsung
LG Display production plant in Paju, Gyeonggi Province / Courtesy of LG Display
By Kim Hyun-bin
The U.S. government is scheduled to announce additional sanctions on China, Tuesday, which many industry watchers believe will include specific details on the ban on China's most-used application WeChat.
The ban will be a devastating blow to LG as it supplies millions of displays to Apple. This will be the second time LG has fallen victim to the U.S. sanctions on China, the first being restrictions on Huawei, which LG Uplus utilizes for its fifth-generation (5G) network in Korea.
“WeChat is used by nearly everyone in China ... It is hard to communicate without it. We contact our suppliers in China through WeChat,” a major display company official said. “Chinese people will be at a crossroads to decide between the application or the iPhone, which is likely to result in a sales decline. We are watching closely on the additional sanctions the U.S. government is announcing and will plan accordingly.”
The concerns rise for Apple as it is unclear if the U.S. tech company will have to remove the WeChat application from the Apple App Store just in the U.S. or from the global market. The worst-case scenario is for Apple to be in a position to have to remove the application prior to the release of its upcoming iPhone 12 series in October.
China accounts for 15 percent of iPhone sales and the news will be troublesome for both Samsung and LG Display which are two major panel suppliers for the U.S. mobile giant.
According to the industry, Samsung and LG are under review to brace for potential losses from the WeChat ban. If the worst-case scenario becomes a reality and WeChat is to be struck from the App Store globally, it will directly affect the Chinese market, which purchases 30 million iPhones annually.
Many industry watchers believe the global WeChat ban could cause up to a 30 percent decline in sales for Apple, while a recent Chinese survey of 200,000 people said 95 percent will choose competitors' smartphones if the iPhone does not provide WeChat.
The iPhone 12 series is expected to come in three sizes ― 5.4 inch, 6.1 inch and 6.7 inch ― and predicted to release 70 million devices.
Samsung Display will supply 100 percent of the displays for the 5.4 inch and 6.7 inch, while the flagship model 6.1 inch will be supplied by both Samsung and LG Display. The industry widely believes LG is only capable of producing 18 million displays so the remaining 27 million 6.1 inch screens will likely be manufactured by Samsung.
Early last month, President Trump signed an administrative order to ban the use of WeChat citing security concerns, which comes into effect on Sept. 20. The specific details of the ban are expected to be announced, Tuesday.
WeChat was launched in January 2011 and now has over 1.2 billion users worldwide, 1.1 billion of which consist of users on the Chinese mainland. It is an all-in-one platform that can be used for diverse applications including making payments, shopping and calling taxis.