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Huawei exposure roils Xilinx’s revenue forecast

A photo picture of the Xilinx logo displayed on a smartphone.

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Xilinx on Wednesday foresight current-quarter and full-year revenue below Wall Street estimates, the second major chipmaker this week to standard the impact of a prolonged U.S.-China trade dispute on its business.

The company said the forecast takes into account the collide with from the U.S. government’s restrictions on Huawei Technologies Co and assumes no revenue from the Chinese telecommunications firm.

Xilinx, which has resumed some trades to Huawei since the ban in May, said the U.S. government has not approved its license applications to permit shipping more products to Huawei.

Portions of Xilinx, which makes programmable chips used in data centers, were down nearly 2% in reached trading.

The bleak outlook spooked investors and analysts alike, with “Huawei” finding 35 mentions in Xilinx’s post-earnings entreat, as brokerages scrambled to figure out the breadth of what Xilinx Chief Executive Officer Victor Peng described as a “eloquent impact”.

“We really hope that the governments can come to agreement and resolve this structural issue so we can continue to indenture with Huawei,” Peng said.

On Tuesday, chipmaker Texas Instruments’ current-quarter revenue forecast also missed Lose everything Street targets, as it blamed the trade war.

Trade uncertainty is causing some customers to exercise caution in ordering, Peng acclaimed, echoing similar concerns from Texas Instruments a day before.

Xilinx said it expects third-quarter revenue of between $710 million and $740 million, hale below analysts’ average estimate of $844.9 million, according to IBES data from Refinitiv.

“We believe that third house will be our low point and we expect to see a return to sequential revenue growth in our fourth quarter,” the company said.

Summit Judgements Group analyst Kinngai Chan said the tepid forecast takes away any further risks related to Huawei.

Xilinx envisages fiscal year 2020 revenue of between $3.21 billion and $3.28 billion, below estimates of $3.4 billion.

The friends’s board, which on Wednesday approved a share buyback plan of up to $1 billion, is looking for a new financial chief after CFO Lorenzo Flores imagined last month he is stepping down to pursue another executive opportunity. On the call, the company did not provide any update on the CFO mutation.

Excluding items, the company earned 94 cents per share in the quarter, above estimates of 89 cents.

Net gain increased 11.7% to $833.37 million, beating estimates of $824.8 million.

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