Broadcom Will Suffer a $2 Billion Hit after U.S. Ban of Huawei

According to a Wall Street Journal report, Broadcom Inc. has said that it would make $2 billion less in annual sales than expected after the U.S. ban on exports to Chinese telecom company Huawei Technologies Co.

The San Jose-based company, which makes a range of radio-frequency chips and circuits that go inside mobile phones and mobile-networking stations, had produced around $900 million of revenue from Huawei in its previous fiscal year according to CEO Hock Tan.

Broadcom issued a sales guidance cut that revealed it now expects its Semiconductor Solutions segment to post fiscal 2019 revenue of $17.5 billion. Previously the outlook was $19.5 billion.

In its report, the company stated that chip clients are “actively reducing their inventory levels,” as trade tensions and the import bans recently imposed on Huawei make them more cautious.

“In the second half, we had expected a recovery; however … with respect to semiconductors, it is clear that the U.S.-China trade conflict, including the Huawei export ban, is creating economic and political uncertainty and reducing visibility for our global [original equipment manufacturer] customers,” Tan also told analysts on a conference call.

Disclaimer: We have no position in any of the companies discussed and have not been compensated for this article.