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Chips are down: Huawei AMERICAN black list is correct EU semiconductor stock

LONDON (Reuters) – the European chipmakers Infineon Technologies, AMS and STMicroelectronics fell sharply on Monday amid concerns the Huawei Technologies suppliers to suspend shipments to the Chinese company by an AMERICAN approach.

FILE PHOTO: The logo of the semiconductor manufacturer Infineon, is on show at the Austrian headquarters in Villach, Austria, 3 June 2018. REUTERS/Lisi Niesner

STMicro was a decrease of 4% to the underside of Paris, the CAC 40, while Infineon decreased 3.4% to the bottom of Frankfurt, the DAX 30 and AMS declined by 4.6% at 0836 GMT.

The sale came after the Nikkei Asian Review reported that Infineon had stopped shipments to Huawei after Washington added the world No. 2 smartphone maker to place a trade black list from last week, the imposition of restrictions that make it difficult to do business with AMERICAN companies.

The report also said STMicro was set to meet this week to discuss whether to proceed with dispatch to Huawei.

German Infineon and France STMicro, Europe’s largest chipmakers, had no immediate comment.

Even if companies can continue to sell parts without being subject to the AMERICAN restrictions, any disruption of Huawei’s activities have a positive effect on its suppliers, said Liberum analyst Janardan Menon.

“In the coming months may generally be assumed that the Huawei part of their (European chip suppliers) companies see quite a bit of weakness, as the US government has no influence on the mind,” he said.

The impact will not be uniform, because the companies have different levels of exposure.

The sale was especially strengthened as investors abandoned bullish positions built up in the trade-sensitive sector in the past few months, concerns about the U.S.-china trade spat eased, and companies forecast a recovery in smartphone demand in the second half of the year.

“With all of the quarter-finals commentary focused in the second half of recovery, a large customer with supply issues could push that guidance,” said a trader.

AMS has almost doubled in value this year, while the STM has an increase of almost 20%, better than the pan-European STOXX 600 index.

(IMAGE: tmsnrt.rs/2WSO19V)

Reporting by Josephine Mason and Helen Reid, Editing by Helen Reid and Catherine Evans

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