Broadcom predicted it will take a $2 billion hit as a result of a US export ban on Huawei and the impact of increased tensions between the country and China.
The US chipmaker, which is one of the first companies to quantify the impact of the US decision to bar businesses from supplying technology and services to Huawei, lowered its fiscal year revenue forecast from $24.5 billion to $22.5 billion.
CEO Hock Tan said Broadcom generated revenue of $900 million from Huawei in the previous fiscal year which ended in November, representing around 4.3 per cent of its total revenue, The Wall Street Journal (WSJ) reported.
Tan explained Broadcom’s customers, which are largely equipment manufacturers it sells parts to, were becoming more cautious about its purchases in May, even before the Huawei ban, and the situation had worsened since.
“With respect to semiconductors it is clear that the US-China trade conflict, including the Huawei export ban, is creating economic and political uncertainty, and reducing visibility for global manufacturing customers,” he said.
Analysts speaking to WSJ believe Broadcom’s negative outlook could spread across the industry, with other major players including Qualcomm and Intel likely to reconsider their own situation as the Huawei ban takes its toll.
“Everybody probably has to cut just due to Huawei if nothing else. Almost everybody has some exposure,” said Stacy Rasgon, analyst at Bernstein Research.
In its fiscal Q2 (the three months to 5 May), Broadcom’s revenue rose 10 per cent year-on-year to $5.5 billion, on profit of $691 million, up from $471 million.Subscribe to our daily newsletter Back