Broadcom shares fall by 6%, following cut in expected earnings, due to Huawei ban

Broadcom, one of the many US-based suppliers of Huawei, saw its shares falling by 6% after announcing a potential decrease in revenue.

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Broadcom, one of the many US-based suppliers of Chinese telecoms manufacturer Huawei, saw its shares falling by 6% after announcing a potential decrease in revenue. This decrease in revenue comes from the US government banning Huawei from trading with any US-based company last month, effectively putting in jeopardy some of the divisions of the manufacturer, such as their smartphone business, heavily reliant on Google’s Android operating system and Google services.

It is estimated that around 900 million USD of Broadcom’s 2018 revenue came from purchases made by Huawei, with the chipmaker expecting up to 2 billion USD less in revenue for 2019. In 2018, Broadcom reported over 20 billion USD in revenue, with Huawei representing around 4% to 5% of this total revenue. Of course, these 2 billion less are not only related to Huawei, with the current climate between the US and China affecting companies on both sides. In all, Broadcom expects to make 22.5 billion in 2019, instead of the initial 24.5 billion USD forecasted.

Broadcom manufactures various components used in smartphones such as Bluetooth/Wi-Fi/GPS chips and modems, as well as parts used in servers such as memory-related controllers or connectivity parts.

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