Huawei fallout spreads: UK chipmaker's stock tanks 35% on profit warning
The US battle with Huawei is sending shockwaves throughout the tech sector.
A Welsh microchip maker has seen its stock tank over 35% after warning that the international furore surrounding Huawei will hit its business.
IQE (IQE.L), which makes parts for semiconductor chips, said on Friday that “uncertain market conditions” would mean revenues for 2019 would be between £140m and £160m — lower than analyst forecasts of £175m.
IQE warned in May that it was exposed to the US trade ban on Huawei but said then it was in “a strong position to adjust.”
However, the company said Friday’s revenue warning was due to “far-reaching impacts on other companies and supply chains that are now becoming evident” from the Huawei ban.
IQE’s share price fell by as much as 37% at the open on Friday in response to the update. At just before 8.30am, the stock was still down by 33%.
Chinese telecoms giant Huawei has been caught up in the escalating trade tensions between the US and China. The company has been accused of stealing US trade and the US banned companies from trading with Huawei in May.
The US has also raised national security concerns about Huawei. The Trump administration believes Huawei has close links to the Chinese government and fears that Huawei’s telecoms equipment is being used for spying.
The political pressure is having an impact on Huawei’s business. Earlier this month the company said full year sales would be $30bn below forecasts and said smartphone sales were set to fall by 40%.
Dr Drew Nelson, the CEO of IQE, said in a statement: “These are unprecedented times for the global semiconductor industry as geo-political conditions affect interconnected global supply chains.
“It is now clear that the impact of Huawei’s addition to the US Bureau of Industry and Security’s Entity List is having far-reaching and long-lasting impacts on global supply chains.”
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Oscar Williams-Grut covers banking, fintech, and finance for Yahoo Finance UK. Follow him on Twitter at @OscarWGrut.
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