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Broadcom’s $2 billion warning to shake the global chip industry
On Friday, Broadcom has hit the global chip manufacturing industry, predicting that Sino-US trade tensions and bans on Huawei will reduce the company's sales this year by $2 billion.
Broadcom's stock fell as much as 8.6%, reducing the company's market capitalization by more than $9 billion. In addition, US chip makers Qualcomm, Applied Materials, Intel, Advanced Micro Devices and Xilinx both fell 1.5% to 3%.
Shares of other Huawei suppliers such as ADI, Skyworks Solutions and Qorvo Inc also fell. Companies including STMicroelectronics, Infineon and AMS also closed lower in European peers.
"The ban does not allow us to purchase Huawei products. At the same time, we have no alternative measures. So in the short term, the impact on us will be huge." CEO Hock Tan said.
Last year, Huawei accounted for 4% of the company's overall sales of about 900 million US dollars. However, Broadcom also said that the forecast reduction is larger than expected.
Since the second half of 2018, the semiconductor industry has been struggling to cope with a slowdown in demand, and German Instruments warned in April that a cyclical recession could last for two years. This is mainly related to the increasing saturation of the mobile phone market, but the large demand for new areas such as self-driving and IoT home and office equipment is still evolving.
However, the impact of trade conflicts and the Huawei ban is far more profound.
“It’s not just the impact of Huawei. More serious than this, OEM [automaker] did not order. The inventory problem that should have been alleviated has not been resolved,” said a European trader. "And the hope for recovery in the second half is not great!"
“We believe that Broadcom’s prospects for the second half of 2019 are not only affected by Huawei’s direct export ban, but also the indirect impact of Huawei’s export ban on other customers and the possible industry-wide impact of possible additional import tariffs.” Summit Insights Group Analyst Kinngai Chan said.
Finisar, which produces sensors for facial recognition, transceivers and other components in telecommunications networks, said in a regulatory filing that the ban on Huawei could have a lasting negative impact on its future revenue. Huawei accounts for 10% of its total revenue in FY 2019.
The CEO of chipmaker Micron Technology also said that the ban on Huawei has brought uncertainty and interference to the semiconductor industry. Micron will announce its third quarter results on June 25.
"You have seen all companies (Qorvo, Skyworks, Maxlinear, Cree, Inphi, Lumentum, NeoPhotonics) have already had a general impact on their quarterly results due to Huawei's export ban." Chan said, "The problem now." Yes, most companies don't want to talk about having a secondary (indirect) impact."
Broadcom's stock fell as much as 8.6%, reducing the company's market capitalization by more than $9 billion. In addition, US chip makers Qualcomm, Applied Materials, Intel, Advanced Micro Devices and Xilinx both fell 1.5% to 3%.
Shares of other Huawei suppliers such as ADI, Skyworks Solutions and Qorvo Inc also fell. Companies including STMicroelectronics, Infineon and AMS also closed lower in European peers.
"The ban does not allow us to purchase Huawei products. At the same time, we have no alternative measures. So in the short term, the impact on us will be huge." CEO Hock Tan said.
Last year, Huawei accounted for 4% of the company's overall sales of about 900 million US dollars. However, Broadcom also said that the forecast reduction is larger than expected.
Since the second half of 2018, the semiconductor industry has been struggling to cope with a slowdown in demand, and German Instruments warned in April that a cyclical recession could last for two years. This is mainly related to the increasing saturation of the mobile phone market, but the large demand for new areas such as self-driving and IoT home and office equipment is still evolving.
However, the impact of trade conflicts and the Huawei ban is far more profound.
“It’s not just the impact of Huawei. More serious than this, OEM [automaker] did not order. The inventory problem that should have been alleviated has not been resolved,” said a European trader. "And the hope for recovery in the second half is not great!"
“We believe that Broadcom’s prospects for the second half of 2019 are not only affected by Huawei’s direct export ban, but also the indirect impact of Huawei’s export ban on other customers and the possible industry-wide impact of possible additional import tariffs.” Summit Insights Group Analyst Kinngai Chan said.
Finisar, which produces sensors for facial recognition, transceivers and other components in telecommunications networks, said in a regulatory filing that the ban on Huawei could have a lasting negative impact on its future revenue. Huawei accounts for 10% of its total revenue in FY 2019.
The CEO of chipmaker Micron Technology also said that the ban on Huawei has brought uncertainty and interference to the semiconductor industry. Micron will announce its third quarter results on June 25.
"You have seen all companies (Qorvo, Skyworks, Maxlinear, Cree, Inphi, Lumentum, NeoPhotonics) have already had a general impact on their quarterly results due to Huawei's export ban." Chan said, "The problem now." Yes, most companies don't want to talk about having a secondary (indirect) impact."