America’s ban on Chinese smartphone giant Huawei hit home on Friday after British chip supplier IQE warned the sanctions will cripple sales.
The Welsh company, which supplies equipment to Huawei’s chip makers, suffered a 32% share price crash after the profit warning. Shares fell 23p to 48.73p — delivering a boost for hedge funds who are shorting IQE shares.
President Trump blacklisted Huawei last month, cutting the company off from vital Western supplies of equipment due to national security fears.
Debate about the phone maker is also raging in Britain over the company’s involvement in the roll-out of new 5G technology.
IQE said the ban will cut annual sales from £175 million to about £150 million. Its two main divisions, wireless and photonics, will both suffer in the second half of the year, it said. A weak smartphone market and drop in demand from a single unnamed customer also fuelled the gloomy predictions.
Chief executive Drew Nelson said: “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.”
“We are now starting to see the wider repercussions of the trade war,” said Peel Hunt analyst Damindu Jayaweera.
The share price plunge will make money for hedge fund manager Crispin Odey’s fund and Geoff Oldfield’s Ennismore Fund Management, which have both bet against the stock. Activist investor Coltrane Asset Management will also do well due to its 4% short.
Trump has started to moved the long- simmering trade war with China from heavy industries to tech, using America’s dominance of the industry in a bid to gain better trade terms from China.
However he is coming under increasing pressure to drop plans for more tariffs.
Tech colossus Apple said in a letter today to the US Trade Representative that the plan “would tilt the playing field in favour of our global competitors”.
