finance news

SK Hynix shares fall by 3.3% as U.S. curbs chip supply of Huawei

SK Hynix shares fall by 3.3% as U.S. curbs chip supply of Huawei
SK Hynix shares fall by 3.3% as U.S. curbs chip supply of Huawei

Shares of South Korea-based SK Hynix, a leading memory semiconductor manufacturer and supplier to Huawei, have recently fallen by nearly 3.3%. This comes along the heels of the move of the United States to curb the supply of semiconductors to the Chinese company. This has strengthened fears of the chip companies on the possible decline in demand.

The company and Samsung Electronics, its cross-town rival, independently design their semiconductors; however, they use the U.S. technology in chipmaking. Owing to this, the companies would not be directly impacted by the restrictions made in the U.S.

However, the ever-increasing trade war between the United States and China could reportedly hurt the demand for cell phones as that of Huawei and Apple Inc. as well as the components that are used in their phones.

According to Park Sung-soon, Cape Investment & Securities’ analyst, despite the indirect impacts of the trade war on the Chinese companies, the move will lead to a decline in demand from Huawei in the long-term. He further added that the Huawei supplier and contract chipmaker, Taiwan Semiconductor Manufacturing Co Ltd., is likely to be impacted by the trade war.

Lee Seung-woo, Eugene Investment & Securities’ analyst, has stated that nearly 14% of the total sales of SK Hynix and TSMC are accounted for by sales to Huawei. Additionally, 1.4% sales for Samsung Electronics are accounted for by Huawei sales.

People with knowledge of the matter further added that Samsung Electronics, which is the competitor of Huawei in the market for smartphones, could benefit from this struggle of Huawei in terms of declining market share for its smartphone business. This has enabled Samsung to recently increase its shares by 1.6%. SK Hynix traded down its products by 1.2%, while a 0.4% hike was reported for the wider market.

Following the recent U.S, announcement, chip-related stocks in the United States such as semiconductor equipment manufacturer, Lam Research have recently lost ground.

Source credit:https://www.reuters.com/article/us-usa-huawei-tech-shares/sk-hynix-shares-fall-on-demand-worries-after-us-curbs-on-huawei-chip-supply-idUSKBN22U01Z

About the author

Nandita Bhardwaj

Nandita holds a management degree with specialization in marketing, and boasts of a short-term experience in the field of recruitment. Following her passion for writing however, she decided to pursue a career in the field of content development. Presently, Nandita pens down news pieces for newsorigins.com, spanning the verticals of business, finance, and technology.