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ReutersLONDON / BENGA-LURU (Reuters) – Broadcom Inc. has sent a shock wave to the global chip-making industry by anticipating that US-China trade tensions and the ban on doing business with Huawei Technologies would reduce the company 's business turnover by 2 billion this year.
The forecast, released Thursday in the company's second-quarter earnings, was the most difficult proof yet of the damage caused by the trade war that US President Donald Trump could do to the global industry.
Broadcom shares fell by 8.6%, wiping out more than $ 9 billion of the company's market value, which was previously based in Asia but now has its headquarters and main list in the United States.
US chip makers Qualcomm, Applied Materials Inc., Intel Corp., Advanced Micro Devices Inc. and Xilinx Inc. all recorded a decline of 1.5% to 3%.
The Philadelphia Flea Index fell by nearly 3%, with 29 of its 30 components trading down. Shares of other Huawei suppliers such as Analog Devices Inc., Skyworks Solutions and Qorvo Inc. have also fallen.
European companies such as STMicroelectronics, Infineon and AMS ended the day down.
"We will see a very clear impact simply because [there are] no purchase is allowed and no obvious substitution is in place, "said chairman and CEO Hock Tan in a conversation with badysts about the results of the Huawei ban.
Huawei accounted for about $ 900 million, or 4% of the company's total sales last year. Broadcom, however, also stated that the planned reduction "extends beyond a particular customer".
"We are talking about uncertainty in our market because of demand in the form of reduced orders as the supply chain tightens, so to speak, compressed," Tan said.
The semiconductor industry is struggling with a slowdown in demand since the second half of 2018, and Texas Instruments warned in April that a cyclical slowdown could last another two years.
This is mainly due to signs that mobile phone markets in some major economies are becoming increasingly saturated, while mbad demand in new areas, such as autonomous cars and Internet devices for individuals and individuals , continues to grow.
The geopolitical risks of Huawei's trade dispute and its ban constitute an additional shock.
"It's not just Huawei, it's deeper than that. OEMs do not order. Concerns about stocks, which were supposed to be mitigating, have not disappeared, "said a European trader. "Bye, hope H2 recovery!
Broadcom, known for its communication chips that power Wi-Fi connectivity, Bluetooth and GPS in smartphones, is also a major supplier to Apple Inc. and the iPhone maker's shares have dropped 1%.
"We believe that Huawei's direct export ban is affecting Broadcom's prospects for 2H19, but that it also includes the indirect impact of the ban on Export imposed by Huawei to other customers, as well as the possible impact on the industry of possible additional import duties, "said Summit Insights. Kinngai Chan, badyst of the group, said.Speech
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