Asia Markets

Shares of Huawei suppliers tumble amid ongoing turmoil

Key Points
  • Shares of Huawei suppliers took a hit on Thursday afternoon amid the ongoing fallout surrounding the Chinese telecommunications giant.
  • The moves came after British chip designer Arm halted its relations with Huawei.
  • The U.S. last week added Huawei to a trade blacklist, which puts curbs on its ability to do business with American firms. That decision was partially eased days later, in an effort to minimize disruption for the Chinese telecommunications giant's partners.
Richard Yu, chief executive officer of Huawei Technologies Co., presents the P30 series smartphone during a Huawei Technologies Co. launch event in Paris, France, on Tuesday, March 26, 2019.
Marlene Awaad | Bloomberg | Getty Images

Shares of suppliers to Chinese tech giant Huawei took a hit on Thursday amid the ongoing fallout surrounding the world's largest telecommunications equipment maker.

In Taiwan, contract manufacturing giant Hon Hai Precision Industry — commonly known as Foxconn — dropped more than 3%, while the world's largest contract chipmaker Taiwan Semiconductor Manufacturing Company fell 3.36%. Luxshare Precision Industry dropped 5.97% in Shenzhen, while South Korean chipmaker SK Hynix also slipped 1.31%. In Hong Kong, Sunny Optical, a smartphone camera module and lens maker, saw its stock plummet more than 7% as of its final hour of trading.

"In terms of sectors, we're still sort of avoiding tech right now. Because if you look at the chipmakers, if you look at the handset-makers, I think they're still gonna be pretty much affected," Kevin Leung, executive director of investment strategy and wealth management at Haitong International Securities, told CNBC's "Street Signs" on Thursday.

The U.S. last week added Huawei to a trade blacklist, which puts curbs on its ability to do business with American firms. That decision was partially eased days later, in an effort to minimize disruption for the Chinese telecommunications giant's partners.

Meanwhile, shares of Samsung Electronics — Huawei's main competitor in the smartphone segment — rose 0.80% on the day. The stock has risen more than 6% this week, as of Thursday's close, with investors betting the company could benefit from Huawei's blacklisting.

Thursday's stock movements came after British chip designer Arm halted its relations with Huawei. Like Apple and chipmakers such as Qualcomm, Huawei uses Arm blueprints to design the processors that power its smartphones. Huawei also licenses graphics technology from the Cambridge-based company.

Alphabet's Google had earlier suspended its business ties with Huawei to comply with Washington's decision to place the Chinese tech giant under the so-called Entity List. But following the U.S. government's easing of trade restrictions and 90-day pause, Google said it would work with Huawei for the period.

The exemption allows Google to send software updates to Huawei devices that run Google's Android mobile operating system until August 19.

Despite the temporary reprieve, Huawei told CNBC on Thursday that its own operating system could be ready in China by fall 2019 if it can't use Google and Microsoft. However, the company emphasized that such a move would be a "plan B" and that it was "still committed to Microsoft Windows and Google Android."

Restrictions on Huawei have led China to reevaluate its economic ties with the U.S., according to a report from the South China Morning Post. The report said China is pondering dropping purchases of natural gas from the U.S. China bought $6.3 billion worth of U.S. crude and liquefied natural gas in 2017.

— Reuters contributed to this report.

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