Xilinx slumps on weak guidance due to Huawei ban

Computer chipmaker Xilinx Inc. spooked investors today after saying its current-quarter revenue will likely fall well short of expectations.

The company said it’s expecting third quarter revenue of between $710 million to $740 million, some way short of Wall Street’s forecast of $844.9 million.

The reason? The ongoing trade war between the U.S. and China, and more specifically a ban on American firms doing business with China’s Huawei Technologies Co. Ltd., without special government authorization, Xilinx officials said.

The company’s forecast assumes no revenue from Huawei, one of its largest customers.

Xilinx Chief Executive Officer Victor Peng (pictured) said his company, which makes programmable chips used in data centers and mobile devices, had resumed some sales to Huawei since the ban began in May. But, he said the government had not approved its applications for a license to sell more products to the company, and this will likely have a “significant impact” on its bottom line.

“We really hope that the governments can come to agreement and resolve this structural issue so we can continue to engage with Huawei,” Peng said.

Xilinx’s warning comes after another chipmaker, Texas Instruments Inc., issued guidance this week that also missed Wall Street’s targets. It also blamed the Huawei situation for coming up short.

On the bright side, Xilinx said it sees the current quarter as a low point, and said it expects to see a return to sequential revenue growth in the fourth quarter ending next March.

Still, the company’s shares were down almost 2% in the after-hours trading session as caution prevailed among its shareholders.

The quarter just gone was actually pretty good though, with Xilinx reporting second quarter earnings before certain costs such as stock compensation of 94 cents per share on revenue of $833 million. Wall Street had forecast earnings of just 92 cents per share on revenue of $827 million.

Photo: Xilinx/Facebook