J.P. Morgan predicts marginal financial impact from Apple Watch ban

Apple Watch Series 9

Apple has to cease sales of its latest Apple Watch models thanks to an ITC decision, but an analyst note suggests the ban will have minimal impact on revenue.

Apple Watch Series 9 and Apple Watch Ultra 2 will no longer be imported to the United States after December 25, 2023, if the ITC ban holds. Analysts at J.P. Morgan expect the ban will impact only about $5 billion in sales or 1% of total sales annually.

Since Apple sells its devices worldwide, the import ban only affects the United States. Back inventory of older models will also still be available to sell at third-party retailers.

The J.P. Morgan note seen by AppleInsider says the ban's true impact will be driven by the length of the ban and Apple's ability to steer U.S. consumers to older models. Customers will likely be easy to push to the original Apple Watch Ultra due to minimal differences, but moving customers to older main series models may prove more difficult.

The estimates made in the analyst note are based on information obtained from IDC data. Shipment estimates place Apple Watch units per year at 43.9 million with an ASP of $466 — estimating approximately $20 billion in revenue.

The note assumes new models make up 80% of shipments and about 30% of global smartwatches are sold in the U.S. That's how J.P. Morgan lands on the estimated impact of approximately $5 billion of sales on an annual basis.

Apple plans to appeal the ruling and has asked the Biden administration to overturn the ruling as part of the commission review process before December 25. The company is also planning an Apple Watch software update that may satisfy customs and prevent a ban from occurring, though the patent holder Masimo believes a hardware change is the only thing that will stop a ban.