U.S. chipmakers may give clues on China hazard
Intel Corp (INTC.O) operates mostly outside the Apple-sphere, and that is exactly why whatever it says next week about business in its vital Chinese market matters so much for investors, Trend reports referring to Reuters.
Apple (AAPL.O) rattled global markets this month when the iPhone maker cut its revenue outlook for the first time in 15 years, blaming factors like the U.S.-China trade dispute and a slowdown in the Chinese economy.
Upcoming quarterly scorecards from Intel, Texas Instruments (TXN.O) and other chipmakers, as well as Ford Motor Co (F.N), will shed light on whether Apple made a convenient excuse for its own troubles or revealed a strengthening headwind faced by global companies that rely on China for a big chunk of their sales.
“They should give us a good gauge of what is happening in China beyond smartphones because Texas Instruments is mostly industrials and autos, and Intel is PCs and servers, and they’re not being driven by the Apple smartphone situation,” said Daniel Morgan, a portfolio manager at Synovus Trust Company in Atlanta.
Underscoring Wall Street's sensitivity to China trade, the S&P 500 .SPX jumped 1.3 percent on Friday after a report that China has offered to go on a six-year buying spree to ramp up U.S. imports in order to reconfigure the relationship between the two countries. [.N]
U.S. stock markets will be closed on Monday for the Martin Luther King Jr. holiday.
China accounts for almost a quarter of Intel’s revenue, while modem chips for iPhones, the focus of recent concerns about Apple, account for just a tiny part of Intel’s business.
While most Intel processors sold in China are used to build laptops and servers for export, Chinese consumers and companies also purchase many of those devices.
With the tariff war already taking a toll on China’s trade sector and increasing the risk of a sharper slowdown in the world’s second largest economy, U.S. multinationals will face pressure to be cautious about their outlooks for 2019.
“Anyone doing business in China, especially if you are an American company - I don’t think you can come out with super-positive guidance,” said Stephen Massocca, Senior Vice President at Wedbush Securities in San Francisco.
Texas Instruments and programmable chipmaker Xilinx (XLNX.O), both reporting on Wednesday, and Intel, reporting on Thursday, are among the S&P 500 companies most reliant on China for their revenue. Investors will listen closely to what those companies may say about how the China trade dispute and the country’s cooling economic expansion are affecting demand for their products.
Also on Wednesday, Ford’s quarterly report will give investors a glimpse of the automaker’s progress trying to reverse a sales slump in China, the world’s biggest car market.
Other chipmakers and related companies reporting next week include ASML Holding (ASML.AS), Lam Research (LRCX.O), SK Hynix (000660.KS) and Western Digital (WDC.O).