European technology stocks came under pressure on Monday as the impact of a US crackdown on Chinese technology group Huawei spread.
The Trump administration last week added Huawei, the world’s number two smartphone marker, to a list of 44 Chinese entities subject to US export controls because they pose a “significant risk” to US national security.
On Monday Google suspended the delivery of key software and technical services to Huawei, while German chipmaker Infineon also suspended its shipments, according to the Nikkei Asian Review. Another European chipmaker, STMicroelectronics, was expected to hold meetings this week to discuss whether it will continue shipping to Huawei, according to NAR.
This prompted a sharp drop in the Stoxx 600 index that tracks Europe’s tech sector, as investors fretted over the wider impact on European semiconductor makers. The index fell 2.5 per cent early on Monday, as chipmakers, including both Infineon and STMicroelectronics, saw declines in their share prices.
Austrian chipmaker AMS led the falls, dropping 9 per cent to trade at SFr39.13 by midday. Italian-French group STMicroelectronics was down 8 per cent at €14.45. In Germany, Siltronic and Infineon both dropped 5 per cent to trade at €68.66 and €17.15, respectively. Netherlands-based ASML shed 4 per cent to trade at €175.18.
Peter Garnry, head of equity strategy, at Saxo Bank, said Google’s move was “effectively the starting signal of a technology Cold War”, adding:
“What we are witnessing is a potential reconfiguration of global trade . . . US companies with significant revenue exposure to Greater China (both the mainland and Hong Kong) are the ones facing the most downside risk from any further escalation of the trade war.”
US futures trade pointed to an opening decline of 1.2 per cent for the tech-heavy Nasdaq Composite. Chipmaker stocks in the US took a hit last week after the Trump administration’s Huawei announcement, with shares in Qualcomm and Broadcom both losing ground.