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.
FALLING BEHIND: Samsung shares have declined more than 20 percent this year, as the world’s largest chipmaker struggles in key markets and plays catch-up to rival SK Hynix Samsung Electronics Co is laying off workers in Southeast Asia, Australia and New Zealand as part of a plan to reduce its global headcount by thousands of jobs, sources familiar with the situation said. The layoffs could affect about 10 percent of its workforces in those markets, although the numbers for each subsidiary might vary, said one of the sources, who asked not to be named because the matter is private. Job cuts are planned for other overseas subsidiaries and could reach 10 percent in certain markets, the source said. The South Korean company has about 147,000 in staff overseas, more than half
Taipei is today suspending its US$2.5 trillion stock market as Super Typhoon Krathon approaches Taiwan with strong winds and heavy rain. The nation is not conducting securities, currency or fixed-income trading, statements from its stock and currency exchanges said. Yesterday, schools and offices were closed in several cities and counties in southern and eastern Taiwan, including in the key industrial port city of Kaohsiung. Taiwan, which started canceling flights, ship sailings and some train services earlier this week, has wind and rain advisories in place for much of the island. It regularly experiences typhoons, and in July shut offices and schools as
TECH PARTNERSHIP: The deal with Arizona-based Amkor would provide TSMC with advanced packing and test capacities, a requirement to serve US customers Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) is collaborating with Amkor Technology Inc to provide local advanced packaging and test capacities in Arizona to address customer requirements for geographical flexibility in chip manufacturing. As part of the agreement, TSMC, the world’s biggest contract chipmaker, would contract turnkey advanced packaging and test services from Amkor at their planned facility in Peoria, Arizona, a joint statement released yesterday said. TSMC would leverage these services to support its customers, particularly those using TSMC’s advanced wafer fabrication facilities in Phoenix, Arizona, it said. The companies would jointly define the specific packaging technologies, such as TSMC’s Integrated
An Indian factory producing iPhone components resumed work yesterday after a fire that halted production — the third blaze to disrupt Apple Inc’s local supply chain since the start of last year. Local industrial behemoth Tata Group’s plant in Tamil Nadu, which was shut down by the unexplained fire on Saturday, is a key linchpin of Apple’s nascent supply chain in the country. A spokesperson for subsidiary Tata Electronics Pvt yesterday said that the company would restart work in “many areas of the facility today.” “We’ve been working diligently since Saturday to support our team and to identify the cause of the fire,”
RSS