Broadcom drops outlook by $2bn, blames trade war

June 17, 2019 | 11:24

Tags: #ban #blacklist #trade #trade-embargo #trade-war

Companies: #arm #broadcom #chinese-government #huawei #intel #semiconductor-industry-association #us-governement #xilinx

US chip giant Broadcom has telegraphed serious trouble for the semiconductor industry as a direct result of the ongoing trade war between the US and China, warning of a $2 billion shortfall in its own sales.

Launched by US President Donald Trump back in March 2018, the ongoing US-China trade war has been steadily increasing in severity despite the concerns of technology companies in both countries. From multiple increases in both the absolute value of the newly-imposed tariffs and the volume of goods which they cover to the entry of Huawei onto a technology blacklist which has severed the company's connection to vital parts, software, and intellectual property, the trade war is now making its impact felt - and many of those suffering are US-based companies.

In an earnings call late last week, US chipmaker Broadcom - which was founded in 1961 as the semiconductor division of Hewlett-Packard - warned that the trade war and the embargo on supplying technology to Chinese telecoms giant Huawei would have a $2 billion impact on its bottom line for the year - news which saw the company's share price plummet 8.6 percent in after-hours trading, though they have since recovered to to 5.6 percent down.

The news gave the markets a taste of what other US-based technology companies can expect, with other US companies known to supply parts to Huawei and other Chinese businesses dropping accordingly.

The US technology industry, meanwhile, has rejected claims that President Trump's ban on supplying technology to Huawei in any way helps the US industry: Sources speaking to the New York Times have confirmed that companies including Qualcomm, Intel, and Xilinx have met with the US Commerce Department to request that the Huawei embargo be lifted, at least for IP which does not directly relate to national security. The Semiconductor Industry Association (SIA), meanwhile, has also backed a lifting of the ban.

The US government has yet to publicly respond to the concerns of its national technology industry members, nor comment on the massive hit to Qualcomm's bottom line caused by the growing trade war with China.

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