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U.S. stock futures fought for direction after several major corporate bellwethers called out a slowing global growth environment for crimping their quarterly earnings results.
Intel Corp. is saddled with expectations to lead a hoped-for turnaround in the semiconductor market, but even unexpected growth in personal-computer sales are unlikely to show that a rebound has begun.
Google said it has achieved a breakthrough in quantum computing research, saying an experimental quantum processor has completed a calculation in just a few minutes that would take a traditional supercomputer thousands of years.
Since Intel last disclosed its results on July 25, the company’s stock (ticker: INTC) is roughly flat along with the S&P 500 index. • Wall Street analysts are predicting that the company will report third-quarter adjusted earnings of $1.23 per share and $18.05 billion of revenue. • Last Friday, Bernstein analyst Stacy Rasgon reaffirmed his Underperform rating for Intel stock, citing Taiwan Semiconductor Manufacturing’s advantage in chip manufacturing technology.
(Bloomberg) -- Semiconductor stocks in the U.S. tumbled after Texas Instruments raised alarms with a fourth-quarter revenue forecast that trailed the lowest estimate on Wall Street. Lynx Equity, including analysts KC Rajkumar and Jahanara Nissar, warned clients that the Dallas company’s miss was “not an auspicious start to the earnings seasons for semis.”Intel Corp., Xilinx Inc., Microchip Technology Inc., Analog Devices Inc. and Nvidia Corp. were among chipmakers that fell more than 2% in after-hours trading. Texas Instruments plunged as much as 11%.Texas Instruments is the first U.S. semiconductor maker to report earnings for the most recent quarter, at a time when chip stocks have surged on optimism that the U.S.-China trade war will reach a settlement and demand will improve. The Philadelphia Semiconductor Index has gained 39% in 2019.What will resonate with investors the most, says Lynx Equity, is the revelation that “most markets weakened further,” according to Texas Instruments chief executive officer Rich Templeton in a statement. Lynx expects “the broad-based semi sector to trade down in sympathy tomorrow.”While expectations for Texas Instruments were relatively subdued, its earnings results are closely watched by investors because of its broad customer base and geographic reach.(Adds Lynx Equity comments throughout)To contact the reporters on this story: Jeran Wittenstein in San Francisco at firstname.lastname@example.org;Kamaron Leach in New York at email@example.comTo contact the editors responsible for this story: Catherine Larkin at firstname.lastname@example.org, Scott SchnipperFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
The complaint filed late Monday in the U.S. District Court for the Northern District of California in San Jose alleged that Fortress Investment Group, which SoftBank bought in 2017 for $3.3 billion, acquired control of more than 1,000 U.S. technology patents. Intel said that Fortress and other companies it owns or controls filed lawsuits against the Santa Clara chipmaker claiming that nearly every Intel processor made since 2011 infringed patents the companies had obtained control of from NXP Semiconductors.
Market breadth remains supportive of all-time highs (ATHs) in major and minor stock indices. Bullishly, breadth for the majority of indices continues to lead price, as has been the case since the secular bull market began in 2009. Indeed, the average stock just doesn’t seem to care about negative headlines. How stocks react to good and bad news is a pretty good tell -- and right now, the market is simply ignoring a tough news flow. The S&P 500 (SPY) and the S&P 400 MidCap (MDY) advance/decline (AD) lines both moved to ATH’s last week. The NYSE common stock only and the S&P 600 AD lines are very close to ATH’s. At the same time, the S&P 400 remains almost 4% from its ATH from September 2018, and the S&P 600 is a remarkable 13% from its August 2018 ATH. As we have said, it’s hard to get too bearish with this underlying strength.
Intel (INTC) Q3 results are expected to have benefited from improvement in PSG, IoTG and Mobileye segments. However, decline in CCG, DCG and NSG is anticipated to have affected in the Q3 results.
The strategic alliance combines Corning's (GLW) wireless connectivity portfolio and Intel's cutting-edge technologies to boost the availability of 5G in buildings.
As most companies in this space have seen no negative earnings estimate revisions, semiconductor ETFs might continue to see smooth trading in the weeks ahead.
(Bloomberg) -- A top-performing global technology fund manager has raised bets on Samsung Electronics Co., making the stock the number one holding in his portfolio, ahead of Apple Inc. or Alphabet Inc.Hyunho Sohn, portfolio manager at FIL Investment Management whose Fidelity Global Technology fund runs about $4.8 billion of assets, said he has been adding positions in the world’s largest memory-chip maker since late 2018. He interpreted the sharp plunge in Samsung’s share price toward the end of that year as an opportunity, and he believes in the long-term growth of the tech giant.“If you ask me why I bought the stock, while the chip cycle was experiencing a downturn, I’d say I have faith in its fundamentals from a long-term perspective,” Sohn said in a telephone interview from London. “Samsung is a typical example of my strategy, which is buying an undervalued stock that the market participants hate temporarily.”Read about Bloomberg Intelligence’s take on the global chip sector hereHis fund, which holds about 60 global technology stocks, has beaten 98% of its peers with an annualized return of about 20% over the past five years, according to Bloomberg-compiled data. The fund’s top five holdings also include Alphabet, Apple, Intel Corp., and Microsoft Corp.The potential growth in demand for memory chips is apparent in the growing needs of cloud storage and service providers alongside the artificial intelligence industry that needs data storage, he said, adding he is also watching the development of 5G networks, which may drive demand for memory chips. Compared with global tech stocks, valuations of Samsung are “still attractive,” he added.Read more: Samsung’s Stock Is Signaling a Bottom for the Global Chip MarketAlthough Samsung’s forward price-to-earnings ratio of 12.6 times is not cheap compared with its historical average, it still lags Micron Technology Inc.’s 14.7 times and Taiwan Semiconductor Manufacturing Company’s 18.6. On forward price-to-book terms, Samsung is trading at 1.2 times, lower than almost all of its peers.Shares of Samsung have risen about 30% this year as overseas investors bought net 4.3 trillion won ($3.6 billion) of shares, the most sought-after stock on Korea’s KOSPI benchmark this year.Read more: TSMC’s $15 Billion Splurge Galvanizes Hope of 5G-Led ReboundTo be sure, it’s not all rosy for the memory chip sector. Micron, the third-largest player in the industry, released disappointing sales forecasts last month. And Samsung’s third-quarter preliminary earnings guidance announced earlier this month is less than half of its operating profits a year earlier. Chip prices have also been mixed. Contract prices for 32-gigabyte DRAM server modules fell 13.8% in the third quarter from the previous three-month period, while those for 128-gigabit MLC NAND flash memory chips rose 12.3%, according to inSpectrum Tech Inc.“I know we don’t see clear signs of recovery in the memory chip industry yet,” Sohn said. “But for me, based on valuations, long-term growth potential, and balance sheet metrics like free cash flow, Samsung is a stock that I am comfortable with having large positions in. I still see an upside for the stock.”(Adds Sohn’s comment on 5G in paragraph after the first chart)To contact the reporter on this story: Heejin Kim in Seoul at email@example.comTo contact the editors responsible for this story: Lianting Tu at firstname.lastname@example.org, Vlad SavovFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
The Silicon Valley company has been steeped in secrecy for most of its five years of existence. Few have seen its electric car, described in a Bloomberg report as a “carlike robot about the size and shape of a Mini Cooper.”
(Bloomberg) -- Terms of Trade is a daily newsletter that untangles a world embroiled in trade wars. Sign up here. Five months after the Trump administration blacklisted China’s Huawei Technologies Co., its business seems alive and well while American firms still don’t know whether they can work with the Chinese company or not.The Department of Commerce in May added Huawei to what’s known as the entity list in an effort to block U.S. companies from selling components to China’s largest technology company, which it accuses of being a threat to America’s national security. Huawei has denied those claims.Despite those actions, Huawei reported last week that its revenue grew 24% in the first ninth months of 2019, boosted by a 26% jump in smartphone shipments. There are also signs that U.S. efforts to block the company from the development of 5G technology have yet to make a big dent: Huawei said it has signed more than 60 5G commercial contracts to date worldwide.LicensesThe entity listing, which requires American firms to obtain a government license in order to sell to blacklisted firms, has caused complications for U.S. companies.Tech leaders and their lawyers have argued for months in closed-door meetings with Trump administration officials that the blacklisting of Huawei, one of their biggest customers, is detrimental to their businesses. Many industry executives are confused about the administration’s end goals and haven’t been able to get clarity on when license approvals will be offered despite those discussions, according to several people familiar with the matter.President Donald Trump said in June after meeting with Chinese President Xi Jinping in Osaka that he’d “easily’’ agreed to allow American firms to continue certain exports to Huawei. Weeks later Trump said he’d accelerate the approval process for licenses but none have been granted so far. The president as recently as this month green-lit the approval of licenses in a meeting with advisers, according to people familiar with the matter, but an announcement has yet to be made.The Commerce Department, in a statement, said it has received more than 200 license requests about Huawei and its affiliates. “Given the complexity of the matter, the interagency process is ongoing to ensure we correctly identified which licenses were safe to approve,” according to the statement. “Moreover, the Temporary General License remains in effect and was recently renewed.”Sales ImpactMicron Technology Inc.’s Chief Executive Officer Sanjay Mehrotra said in September that the lack of decision on its license applications could result in a worsening decline in sales over the coming quarters. The company gave a disappointing quarterly profit forecast last month, pointing in part to the Huawei restrictions. Broadcom Inc. in June also slashed its annual forecast, citing the U.S.-China trade war and disruption to its relationship with Huawei.One of the industry’s main arguments for allowing shipments of non-national security sensitive items is that Huawei can buy some of those components from competitors around the world, including South Korea, Japan and Taiwan.“Unless the ban succeeds in ‘killing’ Huawei, the result will be reduced U.S. global market share in a number of technology areas, something that will hurt, not help U.S. tech competitiveness,’’ said Robert Atkinson, president of ITIF, a Washington-based think tank.WorkaroundsSome firms have resumed shipments to Huawei even without a verdict on license requests. After a closer look at the rules since May, they determined they could continue supplying products based on an export control law. The rule doesn’t subject a product or service to the entity listing’s constraints if a company can prove that a piece of technology owes less than 25% of its origins to U.S.-based activities.Micron in June said it had resumed some memory chip shipments to Huawei. Intel Corp., the U.S.’s biggest chipmaker with plants in Oregon, New Mexico and Arizona, has as well. The company also has facilities in Ireland, Israel and China -- enabling it to argue that a chunk of the intellectual property in its chips isn’t created in the U.S.“We know many U.S. companies continue to ship to Huawei but do so using murky workarounds by way of other countries and third parties,’’ said Samm Sacks, a cybersecurity fellow at New America, a think tank. “It’s questionable whether the Huawei ban has helped U.S. national security so much as created a messy tangle of new problems.’’James McGregor, chairman of consulting firm APCO Worldwide’s greater China region, said he’s focused on what unintended consequences may result from the White House’s actions.“I’m worried about tech companies decoupling from America over time by removing some of their operations from the U.S.," McGregor said in an interview with Bloomberg Television Monday. “They have to look out for the long-term disruption of their business.”Atkinson cautioned not to over-interpret Huawei’s sales figures because the company has been stockpiling supplies for a while, in anticipation of the U.S. action. He said fourth quarter sales will be a more accurate indicator of the export ban’s impact, or whether the company has largely circumvented it.Huawei has said it expects U.S. export restrictions to reduce annual revenue at its consumer devices business by about $10 billion, in part because Google can no longer supply Android updates and apps from Gmail to Maps for the Chinese company’s newest handsets.U.S.-China DealTrump has indicated on various occasions that he’d be willing to consider removing the ban on Huawei for better terms in a trade agreement, drawing sharp criticism from China hawks on Capitol Hill.With the U.S. reaching a “phase one’’ deal with China earlier this month, the big question now is whether Trump will consider removing Huawei from the entity list or ease restrictions. When announcing the accord on Oct. 11, the administration said the issue wouldn’t be part of this initial pact but that it could be a part of phase two.(Updates with comments from McGregor.)To contact the reporters on this story: Jenny Leonard in Washington at email@example.com;Ian King in San Francisco at firstname.lastname@example.orgTo contact the editors responsible for this story: Margaret Collins at email@example.com, Brendan MurrayFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
Advanced Micro Devices has done an admirable job of building a competitive chip lineup with a smaller amount of investment spending, according to Morgan Stanley.
Intel's (INTC) Q3 results are expected to reflect robust adoption of latest processors. However, sluggish data center demand and competition are likely to have negatively impacted Q3 performance.
Investing.com – Throughout the months-long U.S.-Sino trade war, chip stocks have ebbed and flowed with the ups and downs of trade relations between the world's biggest economies. But with recent positive comments from both sides, chip stocks are in the ascendency ahead of aslew earnings from semis this week, including chip bellwether Texas Instruments (NASDAQ:TXN) due Tuesday.
(Bloomberg) -- Hangzhou Hikvision Digital Technology Co. warned it may lose customers in overseas markets because of its U.S. blacklisting, underscoring the extent to which curbs on the sale of American technology may hurt the world’s largest video surveillance business.Executives at the Chinese camera provider, which reported profit in line with estimates, said clients may hold off on purchases while they gauge the impact of those restrictions. But the company is large enough to withstand U.S. sanctions and develop its own technology in the longer term, they said. Its own home market remains a rich vein of revenue as the U.S. business shrinks, a trend that may persist, Huang Fanghong, a Hikvision senior vice president, said on a call Saturday. Its shares gained as much as 5.4% Monday -- the most in more than a month on an intraday basis.Hikvision found itself in the cross-hairs of the Trump administration this month after it joined other Chinese companies -- including Huawei Technologies Co. -- on an Entity List that prevents American firms from supplying it with components and software. The seller of video cameras used around the world in surveillance was accused of involvement in human rights violations against Muslim minorities in the far-western region of Xinjiang. On Monday, brokerages including Citigroup and CICC cut their projections on Hikvision’s 2020 earnings growth.“While management says they expect the worst is over, we believe some customers may have concerns on the impact of the Entity List,” Citigroup analysts wrote.Hikvision executives say they had anticipated the action and stockpiled enough key parts to keep operations going for some time. The company has also said it didn’t foresee major impact on its business as a result of the ban.In Huawei’s case, for instance, some suppliers including Intel Corp. and Micron Technology Inc. developed workaround solutions to the prohibition. Most of Hikvision’s American suppliers are continuing to do business with it, while abiding by export regulations and without the need for special licenses, according to Huang.“We have made a great deal of preparations, from a year ahead of the ban,” Huang said. “There’s no way for us to fully discuss the impact from the entity list in 10 days. We need more time to talk to our suppliers and customers. A steady component supply is key in this process, no matter if we decide to use original materials or a replacement design.”The U.S. decision, which came on the eve of sensitive trade negotiations, takes President Donald Trump’s economic war against China in a new direction: the first time his administration has cited human rights as a reason for action. It deals a potentially heavy long-term blow against Hikvision, which has steadily switched to Chinese-made components in recent years but still relies on the likes of Intel, ON Semiconductor Corp. and Texas Instruments Inc., particularly for higher-end chips.Still, as much as 80% of Hikvision’s sales are insulated from the U.S. ban, analysts Charles Shum and Simon Chan of Bloomberg Intelligence wrote in an Oct. 8 note.“Hikvision’s sales may continue to rise over the next year despite the Trump administration’s decision,” they wrote. “It can also source alternative parts, though with a weaker performance, from local suppliers in the medium term.”Hikvision reported Friday that net income grew 17% to 3.81 billion yuan ($538 million) in the September quarter, while revenue grew 23%. The company forecast growth of 5% to 20% in net income this year.Hikvision was added to the Entity List alongside SenseTime Group Ltd. and Megvii Technology Ltd., two giant enterprises Beijing is counting on to spearhead advances into a revolutionary technology. Hikvision doesn’t play as outsized a role in China’s ambitions but it’s a key partner to Beijing as well as governments around the world. Its cameras are used from Paris to Bangkok and Urumqi, and are considered pivotal to crime prevention as well as helping build “smart cities” or networked urban environments.Longer term, U.S. sanctions threaten to crimp some of the explosive growth Hikvision has managed this decade, in large part due to China’s effort to put in place the world’s largest surveillance and monitoring network. The company may find itself short of the components it needs to build advanced systems, unless Chinese chipmakers succeed in developing more advanced chips -- another of Beijing’s stated policy ambitions in tech.Thanks to cheap but capable cameras, the Chinese company has enjoyed double-digit growth over the past eight years. Demand for its surveillance cameras, video storage and data analysis services has boomed particularly in its home market. Overseas, the company competes against Canon, Hanwha Techwin and Bosch.(Updates with shares and analysts’ actions from the second paragraph)To contact Bloomberg News staff for this story: Gao Yuan in Beijing at firstname.lastname@example.orgTo contact the editors responsible for this story: Edwin Chan at email@example.com, Colum MurphyFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
Enterprise tech has been a hot area for investors in recent years, but the theme works only as long as corporate buyers are paying up for the technology. Goldman Sachs’ September survey of technology sellers showed that demand trends from large corporations have “deteriorated markedly” across all industry verticals, compared with its June survey. “We are taking a more cautious view of enterprise spending and particularly large enterprise-exposed companies,” wrote analyst Rod Hall in Goldman’s report earlier this month.