A bad month is getting worse for US and European semiconductor stocks. While the sector has been one of the biggest casualties of the escalation of trade tensions between the US and China, news that some Huawei suppliers are said to have halted shipments to the Chinese company sent shares in chipmakers plummeting.
Shares in industry heavyweights Qualcomm, which has a major base in Cork, and Broadcom fell more than 5%. Xilinx, which also has a Cork base, Micron Technology, Skyworks Solutions, Qorvo, and Analog Devices also tumbled. All five were highlighted by Morgan Stanley last week as stocks that may see their sales at risk from the Huawei ban.
Google has suspended some business with Huawei, while chipmakers including Intel, with its huge plant in Kildare, Qualcomm, Xilinx, and Broadcom told employees they will not supply the Chinese firm until further notice.
It is a blow to the Chinese tech company that the US government has sought to blacklist around the world. The Philadelphia Semiconductor index fell as much as 3.3% in New York, its biggest drop in a week, while in Europe, the Stoxx 600 Technology Index slid 3%.
Lumentum, a top maker of iPhone facial-recognition sensors, fell as much as 5% after cutting its forecast for the current quarter after stopping all shipments to Huawei. Inphi, another maker of optical components used in mobile phones, dropped 5.3% before paring declines. Inphi gets about 14% of its revenue from Huawei. Infineon — one of Europe’s largest chipmakers — said the majority of products it delivers to Huawei are not subject to US restrictions. The shares fell as much as 6%.
AMS sank 15% even after saying it also hasn’t suspended shipments to the Chinese company. Yesterday’s moves add to declines at the end of last week after the White House blacklisted Huawei.
Adding to the woes, Morgan Stanley analysts said that semiconductor investors should reduce their positions even after recent declines. “We continue to see very high inventories on semiconductor balance sheets and in the channel, weak end demand in nearly every semiconductor end market, a once-in-a-generation magnitude of memory oversupply, and capital spending that hasn’t adjusted enough to feel comfortable with all of that,” they said.