But Genovese tends to believe the move may be a “negotiating tactic.” MKM assigns a 50% probability that Huawei is permanently banned from purchasing key U.S. technology, and hopes there’s a 50% probability the order is walked back. Genovese downgraded NeoPhotonics Corp. on Huawei uncertainty, helping send shares plunging 21% to the lowest in four years.
Earlier, China’s state media signaled a lack of interest in resuming trade talks, while the government said stimulus will be stepped up to buttress the domestic economy. That helped send U.S. stocks broadly lower. Qorvo fell 4% in early Friday trading; Lumentum dropped 4.3%, and Qualcomm slipped 3.4%, while Intel fell 1.5%, and the exchange-traded fund that tracks the Philadelphia Semiconductor Index fell 1.7%.
On Friday morning, Acacia Communications Inc. said it plans to fully comply with the Commerce Department’s Huawei order. As sales to Huawei have been less than 1.5% of total revenue, it sees a “de minimis impact” from losing those sales in the second quarter. But Acacia cautioned that “developments or regulatory actions against Huawei may have a broader impact on overall conditions” in its markets.
This article was provided by Bloomberg News.