Chip makers with the most to lose from a U.S. order banning sales to and from China-based Huawei Technologies saw their shares fall Thursday, dragging the sector into a weekly loss.
The PHLX Semiconductor Index SOX, -1.68% fell 0.7% Thursday, for a 2.4% loss on the week, but was back above 1,430, what one analyst called a “worrisome” technical level for the index. In comparison, while the Dow Jones Industrial Average DJIA, +0.84% was up 1.1% and flat for the week, the S&P 500 index SPX, +0.89% was up 1.3% and up 0.3% for the week, and the tech-heavy Nasdaq Composite Index COMP, +0.97% was up 1.5% and 0.3% for the week.
In the continuing trade war with China, President Donald Trump issued an executive order late Wednesday declaring a national economic emergency banning technology and services from “foreign adversaries.” While the order does not specifically name Huawei, that company and other Chinese suppliers like ZTE Corp. 0763, -6.14% are directly affected.
Leading the chip sector lower Thursday were shares of Synaptics Inc. SYNA, -6.20% Qorvo Inc. QRVO, -7.14% Xilinx Inc. XLNX, -7.27% Skyworks Solutions Inc. SWKS, -6.04% and Qualcomm Inc. QCOM, -4.00% all of which are affected by a Huawei ban. At last check, Synaptics stock was down 6.3%, while Qorvo shares fell 5.7%, Xilinx shares fell 5.8%, Skyworks shed 4.7%, and Qualcomm declined 3.5%.
On Thursday, Susquehanna Financial analyst Christopher Rolland responded to the ban by cutting his price targets for Synaptics, Qorvo, Xilinx, and Skyworks.
“During our last trip to Asia we learned of buy-ahead purchases by Huawei of key U.S. components, particularly for 5G base stations, and to a lesser extent handsets,” Rolland said. “These purchases were described as an amount needed to satisfy one year’s supply and perhaps as much as two year’s supply.”