Broadcom Inc on Thursday cut its annual sales forecast, indicating that the trade dispute between the US and China will wipe out a rebound in orders it had been predicting for the second half of the year.
Revenue would be US$22.5 billion in this fiscal year, the San Jose, California-based company said in a statement. That compares with the prediction it gave three months ago of US$24.5 billion and indicates that it expects to lose out on US$1 billion of revenue per quarter for the rest of the year.
Broadcom chief executive officer Hock Tan (陳福陽) has built one of the world’s biggest chipmakers through a series of acquisitions that give the company one of the broadest reaches in the industry. About half of the company’s revenue last year went through China and Huawei Technologies Co (華為) is one of its biggest customers.
With the world’s two largest economies caught up in an escalating dispute of tariffs and blacklisting, Broadcom is one of a number of chip firms caught in the crosshairs.
“It is clear that the US-China trade conflict, including the Huawei export ban, is creating economic and political uncertainty and reducing visibility,” Tan said on a conference call. “Our customers are actively reducing inventory levels.”
Last year, Huawei accounted for about US$900 million of Broadcom’s sales, Tan said.
Other companies are cutting chip orders on concern that the trade standoff will take a deeper bite out of the economy and that is causing a “very, very, sharp and rapid contraction,” he said.
This is happening even though end demand for devices remains fine in Europe and the US, he said.
The reduced outlook is “very conservative” and attempts to capture the impact of threatened higher tariffs, Tan said.
His company’s outlook is not confined to its status as a supplier of China’s biggest hardware company. The chipmaker’s position as a manufacturer of components for Apple Inc and Samsung Electronics Co makes its orders a gauge of confidence in future demand from some of the world’s largest makers of smartphones.
It is also one of the leading suppliers of networking components used by large data-center operators such as Alphabet Inc’s Google and Amazon.com Inc’s cloud division.
Concern about exposure to China has weighed on Broadcom’s stock this year. It is up 11 percent this year compared with a 21 percent advance by the Philadelphia Stock Exchange Semiconductor Index. The sector was hammered last year by slower orders from customers who built up unused stockpiles of parts.
The chipmaker has stopped giving quarterly forecasts and instead updates its longer-term prediction each quarter.
Sales rose 10 percent to US$5.52 billion in the quarter ended May 5. That fell short of analysts’ predictions. Excluding certain items, profit was US$5.21 per share.
Contract chipmaker United Microelectronics Corp (UMC, 聯電) yesterday said it has signed a memorandum of understanding (MOU) with Polar Semiconductor LLC to collaborate on the production of 8-inch wafers in the US. The collaboration aims to strengthen 8-inch wafer manufacturing in the US amid Washington’s efforts to increase onshore manufacturing of semiconductors, contribute to supply chain resilience against shifting geopolitical dynamics, and ensure a secure domestic supply of power semiconductors critical to automotive, electric grids, robotic manufacturing and data centers, the companies said in a joint statement. Under the MOU, Polar and UMC will identify devices for Polar to manufacture at
TARIFF TALKS: The US secretary of commerce is eyeing more than US$300 billion in investments and said Taiwan would train US workers, but Taipei has denied the latter US Secretary of Commerce Howard Lutnick said the US is expecting a large investment pledge from Taiwan in trade talks, while President William Lai (賴清德) listed areas that need improvement in order for projects to be completed. “We’re in the midst of discussions,” Lutnick said on Wednesday. “But the fact is, this administration’s goal is to bring semiconductor manufacturing to America.” Lai on Wednesday said Taiwan is supportive of US President Donald Trump’s goal of reindustrializing the US, including efforts to ramp up semiconductor production. Such a goal would require the US to reduce its reliance on Taiwan as a key source
The demise of the coal industry left the US’ Appalachian region in tatters, with lost jobs, spoiled water and countless kilometers of abandoned underground mines. Now entrepreneurs are eyeing the rural region with ambitious visions to rebuild its economy by converting old mines into solar power systems and data centers that could help fuel the increasing power demands of the artificial intelligence (AI) boom. One such project is underway by a non-profit team calling itself Energy DELTA (Discovery, Education, Learning and Technology Accelerator) Lab, which is looking to develop energy sources on about 26,305 hectares of old coal land in
Netflix on Friday faced fierce criticism over its blockbuster deal to acquire Warner Bros Discovery. The streaming giant is already viewed as a pariah in some Hollywood circles, largely due to its reluctance to release content in theaters and its disruption of traditional industry practices. As Netflix emerged as the likely winning bidder for Warner Bros — the studio behind Casablanca, the Harry Potter movies and Friends — Hollywood’s elite launched an aggressive campaign against the acquisition. Titanic director James Cameron called the buyout a “disaster,” while a group of prominent producers are lobbying US Congress to oppose the deal,
RSS