Export Restrictions Force Xilinx to Remove Huawei Revenue From FY 2020 Outlook
Commerce Department Huawei export restrictions forced semiconductor maker Xilinx to remove all remaining Huawei-related “revenue expectations” from its financial outlook for fiscal 2020 ending in March, CEO Victor Peng said on a fiscal Q2 call Oct. 23. “Considering the continued trade restrictions with Huawei and the uncertainty presented to our business, we believe it is prudent” to “de-risk” the Chinese company from the forecast, Peng said.
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“Huawei is an important customer, and we hope that an agreement between the U.S. and Chinese governments is reached as soon as possible, so we can resume engaging in a manner consistent with an important customer,” Peng said. Xilinx got about $50 million in revenue from Huawei in the fiscal first half ended Sept. 28, the “vast majority of that” coming in Q1 before the restrictions were announced, he said.
Q2 sales in the Xilinx Wired and Wireless Group in which the Huawei business resides were down 8 percent sequentially from Q1, Peng said. Xilinx gets about 8 percent of its total revenue from Huawei in a normal year, he said.
Though Xilinx “expedited” its Commerce license applications early in Q2, it hasn’t landed any license approvals, he said. Commerce got 200-plus Huawei-related license requests since the Chinese company was added to the agency’s entity list (see 1910220067). Commerce and Huawei didn't immediately comment after the call.
Peng “can't really speak” to how other companies can “justify” resuming shipments to Huawei when Xilinx can’t, he said. "Many people supply to Huawei, because they have a very diversified business," he said. "All I can say is that we're following all the rules and regulations."
Xilinx "obviously" is tracking the situation "extremely carefully with our internal and external counsel," Peng said. The company “determined” in Q2 there were some “older products that we could legally continue to ship” to Huawei, Peng said. It turned out that revenue from those products was “essentially negligible,” he said. “After one quarter of seeing that and not seeing any additional license approvals, we have decided that it's just prudent to take all the risk out.”