FRANKFURT (Reuters) – Siltronic, a German maker of wafers used to make silicon chips, became the latest firm in the semiconductor industry to warn that U.S. restrictions on exports to China would hit sales and profitability.
Munich-based Siltronic, in a statement issued after market hours on Monday, said it expected second quarter sales to be “significantly below” first-quarter levels, with a further decline likely in the third quarter.
“Siltronic AG currently sees a continuing slowdown of the semiconductor industry, which is driven by geopolitical uncertainties, and the negative impact of export restrictions by the U.S. government against Chinese technology companies,” the German company said.
“These developments indirectly affect important customers of Siltronic AG, which have therefore significantly reduced orders for the second half of 2019.”
The profit warning came after industry heavyweight Broadcom Inc sent shockwaves through the industry on Friday by saying that a U.S. ban imposed last month on doing business with China’s Huawei Technologies would knock $2 billion (£1.5 billion) off its 2019 sales.
Huawei’s founder and CEO, Ren Zhengfei, said on Monday the U.S. export restrictions would knock as much as $30 billion off its sales this year – the first time the Shenzhen-based company has put a figure on the estimated damage.
Siltronic said that for the year as a whole it expects sales to be 10-15% down on 2018, compared to an earlier forecast of a 5-10% drop, while its EBITDA margin would be squeezed to 30-35% from an earlier expectation of 33-37%.
Net cash flow would remain positive but would decrease by 180 million euros ($202 million) from a year earlier, compared to an earlier forecast of a decline of 150 million euros.
Siltronic, whose shares have fallen 58% over the past 12 months, will report full second-quarter results on July 25.
(Reporting by Douglas Busvine, editing by Deepa Babington)