0:00 Before his recent visit to the Middle East, in which he visited Saudi Arabia, Qatar and the UAE, US President Donald Trump asked a number of senior US executives to travel with him and join him on the visit, which is considered his first official foreign visit after his return to the White House last January. A large number of executives listened to Trump and traveled with him, including Tesla CEO Elon Musk, BlackRock CEO Larry Fink, and Nvidia CEO Jenson Hwang. However, there was a specific person who refused to travel with Trump. Trump mentioned this person by name during his speech in the Saudi capital, Riyadh. During the speech, Trump addressed the CEO of Nvidia and told him, “Tim Cook is not
0:45 here, but you are.” Then, when he went to the Qatari capital, Doha, he said, “There is a summary. I had a problem with Tim Cook yesterday. I told him, ‘You are my friend and I have treated you well.’ But now I heard that you are going to design ‘Made in India.’ I don’t want you to make it in India. If you want to make it in India, go make it there.” As you like, but don't forget the tariffs that were imposed on India after he returned to America, specifically on May 23rd, Trump wrote on his account on Rose Social, a post in which he said, "I informed Tim Cook, the CEO of Apple, a long time ago that I am waiting for the iPhone that will be sold to the American consumer to be manufactured here in America, not in India or anywhere else. If this does not happen, I will impose customs duties on Apple of no less than 25%." Then he
1:32 concluded his post with the phrase " Thank you for your attention to this matter." In other words, I excuse anyone who looks, even if he is a man, go and make it in India or anywhere else other than America. Tim Cook did not respond to Trump's message, and Apple remained silent and did not enter into a clash with him. However, Apple and its CEO are currently in a difficult and unenviable position. From the perspective of Trump, he can actually hurt the company and impose tariffs that will upset it, and from the perspective that the company will never be able to manufacture the iPhone in America as Trump wants for many reasons, including the huge cost. The expected production of the device inside America, which exceeds double its current cost in the best of cases, but the witness here is that time has passed quickly, and Trump, after he presented a big gift to Apple in his first term through an
2:19 assassination attempt on its most dangerous competitor at the time, the Chinese Huawei, today, without intending to, presented a gift to Huawei, which stood on its feet in the second term, and this is through his intense pressure on Apple, pressure that could, without exaggeration, push the American company towards collapse. So, how could Trump do this to Apple without intending to, and how could the matter end in favor of the Chinese Huawei, which no one is able to overcome after its return to life following a failed American assassination attempt? This is part of what we will chat about together in today’s episode. I am Ashraf Ibrahim, the economic madman, plus [music]. October 26, 2018 was the first day that
3:05 Apple began official sales of its new phone at the time, the iPhone XR. This phone was the least expensive phone among three phones that Apple released in a year. In 2018, Apple launched two other phones, the iPhone XR and the iPhone XS Max, alongside the iPhone XR. However, Apple had high hopes for iPhone XR sales, especially in the Chinese market, which is considered the largest and worst after the American market. One day after the XR was officially launched, Ms. Sue Casey, Apple’s Vice President of Financial Planning, sent a disturbing letter to the company’s CEO, Tim Cook, informing him of a disaster facing the company. What exactly happened? I will tell you in his book published in May 2025 under the title “Apple in China” or “Apple
3:54 in China.” Journalist Patrick Magdi recounted the details of the difficult hours and days that Apple experienced immediately after the release of the iPhone XR in China. According to what Magdi mentioned in his book, Casey sent Cook a letter informing him that iPhone sales in the last quarter of the year would be about 7.1 million units lower than previous estimates, and the main reason for the decline in iPhone sales was the decline in… Demand for the XR in China. The important thing is that Cook, as soon as he saw the message, responded briefly, saying, "This is officially a disaster." This means that it is clear that we are facing a disaster. However, we cannot say that Cook and his colleagues were surprised by the weak demand for the iPhone XR on the day of its official launch. This is simply because, days before, the World White Reseller Operations team
4:42 within Apple informed a company official that pre-orders for the XR were 79% lower compared to the number of pre-orders for the iPhone 8 and 8 Plus the previous year. Pre- orders were doubled. Later, the weak actual sales of the new phone on the first day prompted Donald Conroy, Apple's vice president of financial affairs, to inform Tim Cook that total iPhone sales of all models are expected during the last quarter of 2018 to range between 73.2 million and 67.5 million phones, a decrease of between 5% and 13% compared to the same quarter last year. The question that arises at this time
5:27 is why? Why are iPhone sales declining so sharply in the Chinese market? The answer to this question was not clear at first, but over time, Apple officials discovered the bitter truth. It turned out that consumers in China were comparing the iPhone with the phones of the Chinese company Wow, which had stormed the premium smartphone market forcefully, unlike what most Chinese smartphone companies were doing at the time. Wow was almost the only Chinese company that decided to compete with Apple for the high-end consumer segment of phones. The Wow Mate 20 Pro, which was released in October 2018, created a huge buzz in the Chinese market. This was because, first, it was superior to the iPhone XR
6:12 in many of its capabilities, and at the same time, it was cheaper than it. This was a major reason for the crowding of large numbers of Chinese consumers in front of Wow stores to buy its new phone. What boosted sales of the Wow Mate 20 was the Chinese view of it as a domestic product competing with foreign products. The decline in interest of Chinese consumers in the iPhone XR and their preference for the Wow Mate prompted distributors working with Apple in China not to cancel orders. In the early days of the phone, Apple management was waiting for a miracle to happen and for people to love the phone and demand for it to be higher than the demand on the first day of its launch, but this did not happen. Four days after the phone was made available, an
6:58 Apple employee named Rachel Young sent an internal message informing the company’s official that Apple’s main partners, which represent about 85% of the iPhone sales channels in China, requested that it stop shipments of the XR and stop sending them this phone. In this context, Apple officials met and decided to reduce iPhone XR production by 11 million units in the last quarter of 2018 and by a billion units in the following quarter, which is the first quarter of 2019. Thus, the total production cuts in the two quarters were 17 million units. Apple at that moment was in a very big dilemma because of the new Huawei phone that was eating up the atmosphere in the Chinese market, but what was on the minds of Apple officials and At the top of their minds, Tim Cook was the reaction of
7:45 investors when they learned the predicament the company was in. The phone was launched on October 26, just days before the company announced its third-quarter results on November 1. Usually, when the company announces the results of the previous quarter, it also reveals its expectations for its performance and sales during the following quarter. XR sales were disastrous and will greatly affect the company's sales in the fourth quarter, which is the most important quarter of the year because it is the holiday quarter. The main reason behind this decline is the rise of a strong competitor called Huawei. However, Tim Cook was afraid to reveal this truth to investors and preferred to evade before Apple revealed its results. Market analysts were expecting Apple to achieve revenues of about $93 billion in the last quarter of 2018,
8:32 but internally, Apple's estimates indicated that the company's revenues in this quarter, in light of the decline in XR sales, will approach $87 billion, which is $6 billion less than expectations. The analysts were right in this case that this number was announced to investors for the sake of transparency even if this announcement would negatively affect the company’s share price in the stock market, but Tim Cook and Apple’s CFO at the time, Luca Maestri, preferred to deceive investors. Cook and Maestri came out and told investors in the earnings call that they expected the company’s revenue in the fourth quarter to range between $89 billion and $93 billion. This was a lie and these numbers were exaggerated and baseless. But the lie did not stop there.
9:19 Tim Cook, in his conversation with investors, did not mention the poor performance of the XR in terms of sales. When he was asked directly about the phone’s sales, he evaded and said that this phone had only been released in five days, so we do not have sufficient data to be able to judge on its basis. Then, when he was asked about the company’s sales in the Chinese market specifically, he changed the form of the speech from the present to the past and said that our business is very strong in China last quarter, in which we achieved a growth rate of 16%, did not say a single word about iPhone sales in the quarter that he is in. This was a deliberate manipulation, but as they say, a lie has no legs, and it is very difficult for a company like Apple to hide much, especially since we are talking about a giant company with operations, activities, and a
10:05 supply chain spread across different countries and continents. Four days after the call that took place with investors, Steve Doolin, Apple’s head of public relations at the time, sent to the company’s senior executives a link to an article published by Nikkei Asia in which it revealed to the whole world the truth that Cook and Mastery had hidden from investors. The Japanese newspaper revealed that Foxconn and Pegaton, which assemble the iPhone for Apple, have halted plans to increase production of the XR, which demand for which turned out to be 20 to 25% lower than original expectations. Foxconn specifically decided to operate 45 XR production lines instead of 60 lines. This means reducing its production of this phone by 100,000 phones per day. Almost the same thing
10:52 happened with Pegato. As for Wistron, which was preparing itself to enter the XR assembly and help Foxconn and Pegato in fulfilling the demand, it was asked not to do anything. Nikkei Igga’s report caused great anger within Apple because the information spread in it was largely accurate. Foxconn actually intended to operate 62 lines for the XR, not just 60, and then made them only 45 lines after weak demand for the phone. Pegato did not operate at full capacity, and Wistron asked it to stop and not produce anything that matches Nikkei Igga’s leaks with reality. This made Apple officials believe that Foxconn and its colleagues were the ones who leaked this information. On this basis, Tim
11:37 Cook suggested that he be punished and told his colleagues in the company that the leaks will continue until we decide to impose a large financial penalty. But what happened happened, and people learned of the existence of Apple Must Admit Problems With iPhone Sales On January 2, 2019, Tim Cook released a statement saying that the company's revenue in the last quarter of 2018 would be around $84 billion. This number, of course, was a shock because exactly eight weeks before, he had told people that revenue could reach $93 billion during the quarter. However, at that stage, Cook refused to reveal the full truth. That is, he did not tell people the reason for the decline. Apple said that the decline in sales in China was the main reason for the company's revenue decline in the quarter, but it lied about the
12:24 real reason for the decline in sales in China. Cook said that the reason for the decline in Apple's sales was the economic slowdown in China and the uncertainty in the financial markets. This empty and unreal talk caused panic in the financial markets because many believed Cook's words about the existence of an economic slowdown in the second largest economy in the world. However, the market began to realize that Apple was lying and not telling the truth, and that Tim Cook's justifications for the company's decline in sales were illogical after the statement was issued. Apple's direct line: American journalist Shara Ovidi wrote an opinion piece for Bloomberg in which she accused Apple of lying to investors about the reality of its business. The real reason for the decline in iPhone sales this quarter, which Cook didn't disclose to investors in
13:10 November 2018 or in his January 2019 statement, is Chinese consumers' preference for Huawei's new phone, which Apple executives knew since 2018 was superior to the iPhone in many aspects, beyond price. Apple's sales team in China prepared a six-page report titled "Wi-Fi Competitive Analysis." In it, the specifications of the new iPhone models were compared with Huawei models. The team found that Huawei's flagship, the Mate 20 Pro, easily competes with the specifications of the iPhone XS, which is the higher category of the XR category. The disaster for Apple is that Huawei put the Mate 20 Pro in confrontation with the iPhone XR in terms of price. It did not stop
13:55 there, but it also reduced its price by 17%, and this was a fatal blow to the XR and a very smart and malicious move from Huawei. The Mate 20 Pro, guys, its specifications at the time made it compete with Apple in the category of super premium phones, which at the time included the iPhone XS and iPhone XS Max. This means that it could have priced it at a price above $1,000, and its price would have been justified, but when Huawei came to price its phone, it did not price it as a super premium phone, but rather priced it at a level close to the pricing of the lower category. Which is only premium and what was represented at the time by Apple XR, so any fair and logical comparison in which value is calculated for the price was easily decided in favor of the Mate 20 Pro. The mid-range Mate 20 Pro had a
14:42 larger screen with better resolution, three rear cameras instead of one, double the memory, a larger battery that charges faster, and on top of all of this, this phone competes with the highest category of Apple phones, which is the XS, and outperforms it in many aspects, and at the same time it is sold at a price much lower than the lower category, the XR. In her monthly report issued on November 1, Isabel J. May, who holds the position of Managing Director of Apple in China, sent a report to 16 senior executives at Apple in which she admitted that Huawei’s competitive prices weakened the momentum of new iPhone releases and caused great confusion around the iPhone XR, which was overshadowed by the Mate 20 Pro. May described Huawei’s phone as a strong competitor to the iPhone, sold at a price The Mate 20 Pro is
15:30 about $360 less than the XR, and the most dangerous thing for Apple is that the Mate 20 Pro was the beginning of a fierce attack by Huawei on the iPhone share in China. Over the following months, the Chinese company seemed like an unstoppable rocket-speed train. Huawei was achieving frightening growth rates in the Chinese market. Its market share was increasing at the expense of all companies, led by Apple. In early 2018, Huawei’s share in the premium phone category, whose price ranges between $600 and $800 in the Chinese market, did not exceed 10%, while Apple’s share was 82%. After only one year, Huawei had eaten half of the market, specifically 48% of it, and its share declined to 37%.
16:16 However, in the super-premium phone market, whose price exceeds $800, Apple was still in control and maintained a market share of 74%, which is a large share, without a doubt. But it is much less than its share exactly a year ago when it controlled 90% of this market alone. The secret of the decline is also the terrifying entity called Huawei. What is dangerous for Apple is that Huawei is not only threatening it in the Chinese market, but also pursuing it almost everywhere in the world. In 2019, Huawei sold 238.5 million phones worldwide, and at that time it became the second largest smartphone manufacturer in the world, behind Samsung and ahead of Apple. Apple was in a very big predicament in the confrontation with Huawei as of late
17:03 2018. Huawei was a real threat to the American company and was on its way to removing Apple’s most profitable product and the main source of its revenue, which is the iPhone, from its throne. The one who saved Apple from this difficult predicament was US President Donald Trump. In May 2019, the United States claimed that Huawei posed a direct security threat to it and claimed that the Chinese technology giant, which controlled the 5G communications equipment market It has a relationship with the Chinese government and the equipment that Huawei manufactures and sells all over the world, including America itself, is in danger of being used to launch cyber attacks and spy for the Chinese Communist Party. On this basis, an attempt began, which is more accurately described as an
17:48 attempt to assassinate Huawei. The Americans did not want to punish Huawei, but rather wanted to completely eliminate it. In their quest to achieve this, they imposed unprecedented sanctions on it based on Presidential Executive Order No. 13873. Huawei was blacklisted and American companies were prevented from selling any products or technologies to it without prior authorization. This decision was considered a fatal blow, especially to Huawei’s business in the field of smartphones because it suddenly was no longer able to provide services on its phones, such as Google services, including the Play Store, Gmail, YouTube, and the entire Android system. More than a year later, specifically in August 2020, the Americans tightened sanctions on Huawei and prevented anyone in the world from selling it
18:33 electronic chips that were manufactured using American technology. At that time, Almost no one was making chips that didn't use American technology. In fact, Huawei was banned from buying advanced chips from anywhere in the world. This also affected its business in the smartphone sector, especially in the high-end category, where it wasn't competing with Apple, but rather outpacing it. And guys, it launched its first phone with 5G technology in August 2019, which is 14 full months before it launched a phone with the same technology in June 2020. And before the American sanctions were tightened on it, Huawei was selling 7 million phones with 5G technology per month, but the sanctions were so severe that they left the company lying on the ground. The
19:20 company lost $30 billion in revenue in one year, and its business in the smartphone sector collapsed in a short period. The biggest beneficiary was undoubtedly Apple, which at that time became the only player in the 5G phone market. After Trump besieged it, Huawei's share declined. In the Chinese market, from 29% to 7%, but this void was largely filled by Apple, Huawei's competitor, whose share of the Chinese market increased during the same period by nearly double, meaning it rose to 17% from 9%. Apple embarked on its path with obstacles, while Huawei withdrew and introspected in an attempt to lick its wounds and save itself. This was before it succeeded in reinventing itself in order to return, after a few years, with the image of a company
20:07 much stronger and more dangerous than the company that the Americans tried to kill in 2019. The American sanctions on Huawei are still in place, but they have largely lost their effectiveness, given that Huawei was able to bypass them in one way or another. The US sanctions, guys, can be considered a blessing for Huawei because they forced it to rely on itself and transform itself into what is today considered the most integrated technology company in the world. Wow, Apple is back competing fiercely in the smartphone field with almost the same mix. Excellent features and specifications and a very competitive price. Huawei no longer needs Android because it now has HarmonyOS, nor does it need TSMC or any other company that manufactures electronic chips with American technology after surprising the whole world,
20:54 especially the Americans, with the 7-nanometer Kirin 9000S processor found in its Mate 6 Pro phone, which was released in 2023, and which was manufactured for it by the Chinese company IC. In addition, Huawei is currently on its way to manufacturing its own electronic chips. Trump currently has almost nothing in his hand to do to punish Huawei, which he seems to be less interested in during his second term, in light of the presence of other files that are more prioritized for him, such as the local manufacturing file in Trump’s first term. Apple was very worried about Trump’s victory because of his repeated statements during his election campaign about his intention to force the American company to return to manufacturing in America, but Tim Cook was able to go along with Trump at the time and completely removed the idea of manufacturing the
21:40 iPhone in America from his agenda. He made some maneuvers to avoid the effects of the trade war between America and China by transferring part of the company's manufacturing activity to countries like Vietnam and India, but in his second term, Trump is back. He is very determined to force Apple to manufacture the iPhone in America, and this is impossible from the point of view of the American company, which sees that the United States lacks many of the resistances that would make it a suitable place to build a large and complex supply chain like the chain, the largest part of which is currently located in China. China, in this context, has literally no alternative, neither India, nor Vietnam, nor anywhere else. This is an important point that you must take into account. Without China, people, there is no such thing as Apple. Apple's supply chain is rooted in China to the point that it will take
22:27 decades to build a similar one with the same depth, efficiency, and breadth anywhere else in the world. Until now, 80% of the iPhones sold in the world are assembled in China, and the iPhones that are assembled in India, the largest part of their components are manufactured in China and shipped in Cartons to be collected in India and from there travel to America or any place without customs or with low customs, and therefore there is no room for manufacturing in the United States, which lacks many things, the simplest of which are engineers, and there is no room for Apple to completely separate from China. Therefore, Trump’s current quarrel with China, which he started as soon as he returned to the White House, poses a very great danger to Apple’s future. Apple will actually be the most affected company in the world if things between America and China reach a
23:15 dead end, according to estimates by Gene Munster, managing partner at the asset management firm Deepwater Asset Management. A complete collapse in relations between the United States and China could cause Apple to lose half of its market value or more. According to his statements to the New York Times, the company’s value could fall from $3.2 trillion to $1.6 trillion because nearly a third of its sales are linked to products made in China. This is even if it moves production to other countries. The loss could be greater and the company’s value would fall. More specifically, it will drop to 1.2 trillion dollars if Apple, in the context of this strangulation, loses the Chinese market and is prevented from it. Apple is currently facing these risks because of Trump, the same person who removed Huawei from its path six years ago.
24:02 Today, Huawei seems to have more firmly established feet on the ground compared to Apple, which Trump is threatening to impose 25% customs tariffs to force it to carry out an impossible mission, which is manufacturing the iPhone in America. This point takes us to the question of the episode: If you were in the place of President Trump, what would you do in this predicament with Trump? Would you listen to him and transfer iPhone manufacturing activities to America, despite the difficulty of this step and its very high costs? Or would you prefer to manufacture abroad, whether in China or India, and pay him the 25% customs, if it is a debt? I will follow your answers in the comments at the end. If you liked the episode, please subscribe to the channel and wait for us in new episodes, God willing. [Music]
