Shares of several communication chipmakers fell sharply Thursday following the news that the U.S. Commerce Department was adding Huawei Technologies and dozens of its affiliates to an “Entity List” that would greatly restrict its ability to buy components from U.S. companies.
Qorvo ( QRVO) and Xilinx ( XLNX) , which supply communications chips to Huawei, were all down more than 5% on Nasdaq, and Skyworks ( SWKS) was down close to 5%. And Inphi ( INFI) , another communications chipmaker that got about 14% of its revenues from Huawei in 2018, according to Stifel, was trading down more than 13%.
Huawei’s rival telecommunication equipment companies Nokia ( NOK) and Ericsson (ERIC) appeared to get a boost from the news, however, with Nokia trading up more than 4% on the New York Stock Exchange and Ericsson up around 2% on Nasdaq.
Called a leader in 5G telecommunications technology, China-based Huawei is the largest telecommunications equipment producer in the world, but it’s come under heavy criticism from U.S. officials and other experts who worry about security vulnerabilities and the company’s business dealings.
The move to blacklist Huawei, said the U.S. Commerce Department, comes from the belief in the department that Huawei is “engaged in activities that are contrary to U.S. national security or foreign policy interest,” such as alleged violations of the International Emergency Economic Powers Act, conspiracy to violate the act by “providing prohibited financial services” to Iran, and obstruction of justice.
“This will prevent American technology from being used by foreign-owned entities in ways that potentially undermine U.S. national security or foreign policy interests,” said Secretary of Commerce Wilbur Ross in a statement.
An email seeking comment from Huawei’s corporate communications office was not immediately responded to. Qorvo and Skyworks could also not be immediately reached for comment.
A Xilinx spokeswoman confirmed the company is a Huawei supplier, however, when reached and said that, “We are aware that the U.S. Department of Commerce will likely place Huawei on its ‘Entity List’ and other possible actions by the U.S. government. We are evaluating the situation, but have no additional information to share at this time.”