Semiconductors have been a beacon of stock-market outperformance for months, even years.
But recent headwinds have started to pile up, putting unprecedented pressure on the sector. And many of the issues facing chipmakers can be tied into problems facing the broader market.

As the stock market melts down, a great deal of attention is being paid to the obvious culprits: banks, oil, and President Donald Trump’s continued insistence upon ratching trade tensions higher.

But in a less publicized corner of the equity market, selling pressure has raged, driven by an unfortunate confluence of factors. We’re referring to the previously dominant semiconductor sector, which can’t seem to sidestep a seemingly endless barrage of negative headlines.

The most glaring example on Thursday was the controversial arrest of Huawei CFO Meng Wanzhou. The news rippled through global equities as traders braced for more trade-war tensions. And since Huawei is among the world’s biggest producers of smartphones, the chipmaker supply chain took a beating.

In terms of specific semiconductor companies, $23 billion Lam Research added to industry-wide pressure on Thursday after its CEO announced he was resigning. Martin Anstice agreed to step down amid an inquity into alleged workplace misconduct.

But no discussion of semiconductors is complete without the golden goose itself: Apple. Chipmakers frequently find the fates of their stock prices tied to the latest developments at Apple. And as reports started to trickle in that demand for the new iPhone XR was far weaker than expected, chipmakers absorbed heavy losses.

As a result of all that, the wreckage in chipmakers has piled up quickly — and it’s been quite severe. The bellwether Philadelphia Semiconductor Index has plunged roughly 18% since reaching …read more

Source:: Business Insider


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