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31 July


Shares of the main Asian suppliers Huawei collapsed

The reason was the recent US sanctions against the Chinese company

Photo: Reuters

/NOVOSTIVL/ Asian suppliers for Huawei Technologies have suffered heavy losses in their share prices since the U.S. announced a virtual export ban against the Chinese telecom manufacturer two weeks ago. This article appeared in the Nikkei Asian Review.

Q Technology, a Chinese company that makes camera components for Huawei phones, has fallen more than 50% on the Hong Kong exchange from a recent year-to-date high. When reporters asked Chairman He Ningning last week about the business outlook, he struggled to put the best spin on the situation.

"Huawei is one of our key customers," the chairman said. "We have to wait for accurate information from Huawei" before any predictions can be made.

The company's shares also have tumbled 27.4% between May 15 - when the U.S. Commerce Department said it would put Huawei on its so-called Entity List - and Wednesday's close.

Other major suppliers have fared similarly. BYD Electronic, which is strong in smartphone batteries, skidded 19.6% during that period. Hon Hai Precision Industry, the Taiwanese contract assembler known as Foxconn, is off by 7.2%. South Korean chipmaker SK Hynix, which derives 5% to 10% of its sales from Huawei - mostly in smartphone chips - is down 11.3%.

While 36% of Huawei's key suppliers are based in the U.S., roughly 60% hail from Asia. Mainland China accounts for 27% of the suppliers, while Japan is home to 12% and Taiwan 11%. The Foxconn group alone is the source of approximately 10% of Huawei's procurement by value.

Investors are distancing themselves from these stocks due to the prospect that Huawei, the world's second-biggest producer of smartphones, will curtail its shipments totaling roughly 200 million units annually. Strategy Analytics, a U.S. research firm, expects shipments to drop 24% this year under the U.S. blacklisting, and 23% next year - meaning that Huawei would ship about 100 million fewer smartphones over two years.