Samsung Electronics' (SSNLF) second-quarter profit warning has U.S. chipmakers in the spotlight Friday after the world's biggest semiconductor firm said President Donald Trump's now-rolled-back ban on American firms doing business Huawei Technologies will hit its bottom line.
Other big chipmakers including Mitel (MU) , BroadComm (AVGO) and Qualcomm (QCOM) were on investors' radars on Friday after Samsung announced that its second-quarter operating profit likely dropped 56.3% from a year earlier as the ongoing U.S.-China trade dispute impacted already slowing demand for memory chips.
While Trump and China President Xi Jinping called a trade-war truce and a possible cease-fire on the U.S.'s ban on doing business with Huawei at the end of last weekend's G-20 summit in Osaka, Japan, investors are keeping a close eye on how it will impact earnings going forward.
"The Huawei ban appears to have been lifted in segments where the threat of espionage is irrelevant, such as smartphones. As such, downside pressure on memory prices will lose some steam," argued HMC Investment analyst Greg Roh. "As for Japan's move to curb semiconductor materials exports to Korea, we need to watch how things progress seeing that Korean semiconductor names have about one month's worth of inventory."
Indeed, shares of Mitel, Broadcom and Qualcomm all ended the trading day lower on Wednesday heading into the July 4 U.S. Independence Day holiday amid what investors see as slowing demand for chips and components for electronics as well as rising inventories.
75.14 USD−1.49 (1.94%)
Shares of Qualcomm were down almost 2%, or $1.49, at $75.1 in premarket trading on Friday. Shares of Micron were down a little more than 1% in early trading at $39.18, while shares of Broadcom were down 0.39% at $283.77.
While Micron recently reported fiscal third-quarter earnings that handily beat forecasts, inventories continued to pile up, with inventory on hand standing at 149 days at the end of the quarter - a big jump from the prior quarter and higher than where it has been in some time.
"We're lowering our estimates meaningfully, as the U.S.-China trade dispute has meaningfully lowered near-term demand and visibility, in our view," KeyBanc Capital analyst Weston Twigg wrote in a research note following the company's earnings release.