European chipmakers tumble after Broadcom dashes hopes of rebound in demand

FILE PHOTO: Broadcom Limited company logo is pictured on an office building in Rancho Bernardo, California May 12, 2016. REUTERS/Mike Blake

LONDON (Reuters) – European semiconductor stocks fell on Friday after U.S. chipmaker Broadcom warned a U.S.-China trade conflict and export restrictions on Huawei were causing a broad slowdown in demand for chips.

Shares in ASML, STMicroelectronics, Siltronic, ASM International, Infineon, and AMS tumbled by 2.7% to 6.6% as the warning reignited fears chipmakers would not keep to their promises of a second-half recovery.

“It’s not just Huawei, it’s deeper than that. Visibility is shot. OEMs [carmakers] aren’t ordering. Inventory concerns, which were supposed to ease, have not gone away,” said a trader.

“Goodbye H2 recovery hopes!” he added.

The falls in chipmakers – which make components used in sensors for smartphones, cars, and medical equipment – drove Europe’s tech sector index down 1%, the worst-performing sector in Europe on Friday morning.

They followed an overnight fall in U.S. semiconductor stocks after California-based Broadcom’s warning of a broad slowdown in chip demand.

The CEO of chipmaker Micron Technology also said the ban on Huawei brings uncertainty and disturbance to the semiconductor industry.

Reporting by Helen Reid, Editing by Josephine Mason and Susan Fenton

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