Xilinx resumes supply to Huawei, but faces business pressure

Xilinx reported revenue of $850 million (+24 percent) with net income of $241 million for the first quarter of fiscal year 2020.
Xilinx for Huawei

Xilinx generated 39 percent of the revenue from A&D, Industrial and TME, 15 percent from Automotive, Broadcast and Consumer, 41 percent from Wired and Wireless Group and 5 percent from Data Center Group during the June quarter.

San Jose, US-based Xilinx during the earnings call said it resumed some sales to China-based networking company Huawei Technologies. Xilinx makes programmable chips that are used in data centers to speed up tasks like artificial intelligence work, as well as chips that are used in 5G telecommunications base stations.

Xilinx said no single customer accounted for more than 10 percent of its revenue. Xilinx has cut its sales expectations for Huawei by more than half.

Chief Executive Victor Peng said that Xilinx stopped all sales to Huawei in May when U.S. restrictions took effect. Peng said that during the fiscal first-quarter ended June 29, Xilinx determined that some of its products, such as its older, 28-nanometer chips and some chips not designed for 5G gear, could legally could be sold to Huawei.

Xilinx resumed shipping those chips and has applied for licenses with the U.S. Commerce Department to resume selling other products to Huawei.

The company said it expects second-quarter revenue of between $800 million and $850 million.

The company ships chips to other companies building out networks for 5G, including ZTE, which had previously been the target of U.S. restrictions but has since had them removed.

Other chipmakers, such as Broadcom, have said they expect other electronics makers to step in and eventually fill in lost Huawei sales, but Peng told Reuters that is less likely to happen in the market for 5G gear.

Xilinx in May said it expected between $3.45 billion and $3.6 billion in revenue for the full year. Xilinx said it will give more details on its full-year forecast in October indicating that there is pressure on the company in the wake of the Huawei controversies.