Chipmakers across the world took a hit on Monday from the fallout surrounding the US crackdown on Chinese technology group Huawei, with stocks in major suppliers tumbling to the lowest level in more than two months.
Semiconductor stocks on both sides of the Atlantic fell sharply as a decision by the Trump administration to blacklist the world’s number two smartphone marker reverberated back up the supply chain.
The MSCI index of semiconductor stocks across developed market countries dropped as much as 3.7 per cent, bringing it to the lowest level since early March.
“The Huawei fallout creates a wild card that market isn’t loving as it seems like Trump’s blacklisting of the company is beyond a bargaining chip in the wider trade war,” said JJ Kinahan, an analyst at TD Ameritrade.
The US last week added Huawei to a list of Chinese entities subject to US export controls because they pose a “significant risk” to US national security.
On Monday Google suspended the delivery of key software and technical services to Huawei, while German chipmaker Infineon also suspended its shipments, according to the Nikkei Asian Review. Another European chipmaker, STMicroelectronics, was expected to hold meetings this week to discuss whether it will continue shipping to Huawei, according to NAR.
Shares in Qualcomm — which earns around 5 per cent of its revenues from Huawei — were down 5.1 per cent in early US trade on Monday. Rival Broadcom lost 4.5 per cent, while Micron was off 3.4 per cent. Graphics chipmaker Nvidia fell 3.2 per cent; Texas Instruments lost 1.8 per cent and Intel was down 1.4 per cent.
The Philadelphia Semiconductor index, which tracks 30 US-listed companies that design, distribute, make and sell chips and trades under the ticker Sox, was off 2.6 per cent.
The US sell-off followed a gloomy day for European chipmaker stocks, with the Stoxx 600 index that tracks Europe’s tech sector dropping as investors fretted over the wider impact of the American clampdown. The index fell 3 per cent by Monday afternoon, as chipmakers — including both Infineon and STMicroelectronics — saw sharp declines in their share prices.
Austrian chipmaker AMS led the falls, dropping 15 per cent. Italian-French group STMicroelectronics was down 9.9 per cent. Netherlands-based ASML shed 5.9 per cent, while in Germany, Siltronic and Infineon dropped 5.4 per cent and 4.6 per cent respectively.
Peter Garnry, head of equity strategy, at Saxo Bank, said the Google suspension was “effectively the starting signal of a technology Cold War”, adding: “What we are witnessing is a potential reconfiguration of global trade . . . US companies with significant revenue exposure to Greater China (both the mainland and Hong Kong) are the ones facing the most downside risk from any further escalation of the trade war.”
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