Chips Stocks Rattled As Companies Halt Supplying China's Huawei

As trade tensions between the United States and China have escalated, companies such as Alphabet Inc GOOGL's Google have suspended some busniess with Chinese firm Huawei.

What To Know

On May 15, the Trump administration added Huawei to a list of companies that U.S. firms can no longer trade with unless they have a licence. The "entity list" bans the company from acquiring technology from U.S. firms without government approval.

As a result, Google has suspended licensing of Android software to Huawei’s smartphones, while U.S. chipmakers such as Intel INTC, Qualcomm QCOM and Broadcom AVGO have told their workers they will stop supplying Huawei, according to Bloomberg.

Why It's Important

The move is having a rippling effect across the industry.

Several other stocks are rattled by the trade war, with several semiconductor names trading lower: Xilinx, Inc. XLNX, STMicroelectronics NV STM, Taiwan Semiconductor Mfg. Co. Ltd TSM, Micron Technology, Inc. MU Advanced Micro Devices, Inc.AMD and NVIDIA Corporation NVDA.

In response to the ban, Huawei's Twitter account tweeted, “Lose-Lose, Washington’s decision to force U.S. companies to stop doing business with tech giant #Huawei creates losers on both sides. #HuaweiFacts”

There is widespread speculation China may also temporarily hike tariffs for Apple Inc AAPL.

Related Links:

Wall Street Weighs In On Apple's Trade War Risk

What The Trade War Means For The Bond Market