By Alexander Osipovich
Semiconductor stocks slid Tuesday, pummeled by Apple Inc.'s warning that its revenue would be hurt by China's coronavirus outbreak.
Broadcom Inc. fell 2.2%, Intel Corp. fell 1.7%, and Qualcomm Inc. fell 1.8%, while the S&P 500 was down 0.3%. Like many makers of computer chips, all three companies are Apple suppliers.
Shares of Qorvo Inc., a smaller firm that builds radio-frequency chips used by Apple, dropped 2.6%, while Cirrus Logic Inc., another Apple supplier, shed 3.2%. Shares of Apple itself were down 1.8%.
The iPhone maker said after markets closed Monday that it wouldn't meet its revenue targets for the current quarter, which it had just issued in January, before the full scale of the virus outbreak had become clear.
Apple said its iPhone manufacturing partners' facilities in China were returning to normal conditions more slowly than anticipated, even though they are located outside Hubei province, the epicenter of the outbreak. Apple also said demand for its products in China was proving weaker than expected, with its stores in the country closed and customer traffic reduced.
The virus has killed more than 1,800 people in China, and tens of millions of people have been put under quarantine as Chinese authorities seek to contain its spread.
Car manufacturers, retailers and airlines have all been affected by the outbreak, but the technology sector is likely to face some of the biggest disruptions due to the concentration of production in China. China represents more than 50% of the global technology supply chain, Credit Suisse analysts said in a research note.
Still, the Credit Suisse analysts projected that the drop in semiconductor stocks would be temporary. "We would recommend investors who can look into [the second half of 2020] and beyond should use weakness to accumulate best-in-class companies with a solid structural outlook," they wrote.
Write to Alexander Osipovich at firstname.lastname@example.org