10 Jun

Will the Huawei Restrictions Hurt US Chip Stocks?

WRITTEN BY Jitendra Parashar

US-China trade war

Exactly a month ago, on May 10, President Donald Trump increased tariffs on Chinese imports worth $200 billion. With this move, the US-China trade war took an ugly turn as China retaliated by increasing tariffs on US imports worth $60 billion starting June 1.

Last month, the Trump administration also restricted Huawei from transacting with the large US tech companies, including chipmakers. These rising trade tensions triggered a massive sell-off in the tech stocks. In May, shares of NVIDIA (NVDA), Qualcomm (QCOM), and Intel (INTC) fell 25.2%, 22.4%, and 13.7%, respectively.

Will the Huawei Restrictions Hurt US Chip Stocks?

Next level of the trade war?

According to a recent Reuters report, US chipmakers including Intel and Qualcomm “have restricted employees from an informal conversation with Huawei.” US tech companies are aiming to “to avoid any potential issues with the U.S. government” after the US Department of Commerce blacklisted Huawei on May 16.

Both the US chipmakers—INTC and QCOM—reportedly “have provided compliance instructions to employees” in this regard.

Collateral damage

In the last month, talk of China using patriotic rhetoric to incite anti-American sentiment among consumers has increased. Reports suggested that Chinese consumers are boycotting US companies, including US tech giant Apple (AAPL), which is already struggling with weakening iPhone demand.

Restricting employees from interacting with Huawei might keep President Trump happy for the moment, but the move could take the US-China trade war to the next level and harm large tech stocks from both countries.

Huawei is the world’s largest manufacturer of telecommunication devices while it ranks second among the world’s largest smartphone makers. As a result, ongoing US-China trade disputes are likely to cause collateral damage for companies on both sides of the conflict, hurting their future growth outlook.

But today at 2:50 PM ET, QCOM and INTC were up 2.8% and 1.8%, respectively, for the day amid the broader-market rally due to President Trump indefinitely postponing tariffs on Mexico.

Latest articles

German chip maker Infineon Technologies has reportedly raised 1.55 billion euros (~$1.74 billion) in capital by selling its shares to fund its acquisition of Cypress Semiconductor (CY). Infineon has sold ~113 million new shares at 13.70 euros each.

As of June 18, Dunkin’ Brands (DNKN) was trading at $80.07, an 8.9% rise since reporting its first-quarter earnings on May 2. Also, DNKN was trading at a premium of 29.8% from its 52-week low of $61.69 and a discount of 1.6% from its 52-week high of $81.40.

19 Jun

Are Lower Oil Prices Weighing on ExxonMobil Stock?

WRITTEN BY Maitali Ramkumar

ExxonMobil (XOM) stock has fallen 7.1% in the second quarter so far. Let's review ExxonMobil's stock performance in comparison to oil price changes and equity market movements in the quarter.

19 Jun

As Facebook Unveils Libra, MSFT and CRM Join a Blockchain Group

WRITTEN BY Mayur Sontakke, CFA, FRM

On June 18, Facebook (FB) launched Libra, its own cryptocurrency. On the same day, CoinDesk published another piece of blockchain news that didn’t receive as much fanfare as Facebook’s Libra news. Was the timing a coincidence? We think not.

Uber Technologies (UBER) has picked Melbourne as another test site for its flying taxi service known as UberAir. The Australian city is the first international test site Uber has chosen for its flying taxi service. The addition of Melbourne brings the number of test locations Uber has picked for its UberAir service to three.

Lyft (LYFT) and Uber Technologies (UBER) are pushing back against California legislation that would require them to recognize their drivers as employees rather than independent contractors. The legislation would require companies like Lyft to give their drivers the compensation and benefits spelled out under California’s employment regulations.