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Demand for microchips to remain low, timing of recovery uncertain: Broadcom

Demand for microchips to remain low, timing of recovery uncertain: Broadcom
Demand for microchips to remain low, timing of recovery uncertain: Broadcom

Broadcom Inc. said in a statement on Thursday that the demand for microchips will remain low as the industry downturn seems to linger for a while. It added that the timing of recovery from the dampening market is uncertain. 

The chip industry has experienced a serious decline in recent times. Gartner research firm has predicted that the global revenue from semiconductor sales would amount to $429 billion for the current year, down by 9.6 percent. The decline has also be caused by the ongoing trade war between the United States and China, excessive duties on imports and the trade ban against Huawei by the US, all of which has resulted in pressure on the chipmakers around the world.

Hock Tan, chief executive officer of the Broadcom, said that any significant recovery in the industry is not expected in the near future. With this belief, he said that the company will be working considering that the market will remain low and macroeconomic conditions will be uncertain in the foreseeable future.

Broadcom shares slipped by 1.5 percent in extended trading.

The revenue from its semiconductor business dropped to $4.35 billion, a 5 percent reduction from that of last year. While the total revenue of the company increased to $5.52 billion, it fell short of the expectations of analysts of $5.54 billion.

Broadcom did not change its full-year forecasted revenue of $22.5 billion for the current year and said that the trade tensions between the two largest economies of the world have not affected its business. 

An analyst from Summit Insights Group, Kinngai Chan, said that there are signs that the demand would recover a bit in the second half of the year. However, he added that Broadcom should remain cautious due to the uncertainty caused in the global economy due to the trade war.