Broadcom withdraws 2020 revenue forecast on coronavirus worries

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FILE PHOTO: A sign to the campus offices of chipmaker Broadcom Ltd is shown in Irvine, California, U.S., November 6, 2017. REUTERS/Mike Blake/File Photo

(Reuters) – Broadcom Inc withdrew its revenue forecast for 2020 on Thursday, joining a host of chipmakers that have either cut or pulled their sales outlook due to demand and supply disruptions caused by the coronavirus outbreak.

Nearly 20% of Broadcom’s revenue in 2019 came from Apple Inc, which was the first big technology company to say the epidemic was hurting its production and demand in China.

Chief Executive Officer Hock Tan downplayed reports about one of its wireless chip units coming up for sale.

“We have come to the conclusion that continuing to invest in and operate our wireless assets will create the most value for our business and for our shareholders,” Tan said on a conference call with analysts.

The Wall Street Journal had reported in December that Broadcom is working with Credit Suisse to sell its radio frequency segment in a process that is at an early stage.

Tan said the company will supply radio frequency components for next three generations of 5G phones for its top customer, which analysts believe to be Apple.

VIRUS IMPACT

Tan said Broadcom’s supply chain was not impacted to any “meaningful level” due to the outbreak, but there was a slowdown in demand.

“There is no doubt COVID-19 has created a high level of uncertainty, which we can’t help but think is going to have an impact on our semiconductor business, in particular, in the second half of the fiscal year,” he said.

The chipmaker said it expects second-quarter revenue of $5.7 billion, plus or minus $150 million, below analysts’ average estimate of $5.94 billion, according to IBES data from Refinitiv.

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