Apple's Virus Warning Takes Bite Out of Chip-Maker Stocks -- Update
February 18 2020 - 5:09PM
Dow Jones News
By Alexander Osipovich
Semiconductor stocks slid Tuesday, pummeled by Apple Inc.'s
warning that its revenue would be hurt by China's coronavirus
outbreak.
Broadcom Inc. fell 2.2%, Intel Corp. fell 1.7%, and Qualcomm
Inc. fell 1.8%, while the S&P 500 was down 0.3%. Like many
makers of computer chips, all three companies are Apple
suppliers.
Shares of Qorvo Inc., a smaller firm that builds radio-frequency
chips used by Apple, dropped 2.6%, while Cirrus Logic Inc., another
Apple supplier, shed 3.2%. Shares of Apple itself were down
1.8%.
The iPhone maker said after markets closed Monday that it
wouldn't meet its revenue targets for the current quarter, which it
had just issued in January, before the full scale of the virus
outbreak had become clear.
Apple said its iPhone manufacturing partners' facilities in
China were returning to normal conditions more slowly than
anticipated, even though they are located outside Hubei province,
the epicenter of the outbreak. Apple also said demand for its
products in China was proving weaker than expected, with its stores
in the country closed and customer traffic reduced.
The virus has killed more than 1,800 people in China, and tens
of millions of people have been put under quarantine as Chinese
authorities seek to contain its spread.
Car manufacturers, retailers and airlines have all been affected
by the outbreak, but the technology sector is likely to face some
of the biggest disruptions due to the concentration of production
in China. China represents more than 50% of the global technology
supply chain, Credit Suisse analysts said in a research note.
Still, the Credit Suisse analysts projected that the drop in
semiconductor stocks would be temporary. "We would recommend
investors who can look into [the second half of 2020] and beyond
should use weakness to accumulate best-in-class companies with a
solid structural outlook," they wrote.
Write to Alexander Osipovich at
alexander.osipovich@dowjones.com
(END) Dow Jones Newswires
February 18, 2020 16:54 ET (21:54 GMT)
Copyright (c) 2020 Dow Jones & Company, Inc.
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