DURHAM – The US crackdown on China tech giant Huawei is now also hurting Cree.
The Durham-based tech conglomerate on Tuesday lowered revenue expectations for the quarter ending June 30, citing in part the US trade decision impact on Huawei as well as “softer than originally expected” demand for its LED products. Revenue projections were cut by a minimum $18 million or some 7 percent.
Cree (Nasdaq: CREE) had expected $15 million in sales of semiconductors and other components from its Wolfspeed business group by June 30.
In early trading ahead of the market open, Cree shares were down some 4 percent from Monday’s close of $59.39. Later, shares fell as low as $57.90 before rallying. Near the close, shares were off 1.4 percent.
The news comes a month after Cree announced a $1 billion expansion plan.
“Pending any further guidance from BIS [Bureau of Industry and Security] the company does not expect to ship any additional products in the fourth quarter for the Huawei build-out and cannot predict when it will be able to resume such shipments,” Cree said in a statement issued early Tuesday.
Cree cut its guidance to between $245 million and $252 million from a range of $263 million to $271 million.
Huawei is deploying next-generation 5G wireless technology, which is a key to Cree’s technology development and sales. However, Huawei is facing a crackdown on its technology due in part to security concerns. Huawei is based in China. It has denied any security threats.
Cree said its change in guidance is tied to the May 1 decision bu the BIS to add Huawei and “68 of its affiliates” to the “Entity List.”
“The Entity List identifies foreign parties that are prohibited from receiving some or all items subject to the EAR unless the exporter secures a license,” according to the BIS website.
“These parties present a greater risk of diversion to weapons of mass destruction (WMD) programs, terrorism, or other activities contrary to U.S. national security and/or foreign policy interests. By publicly listing such parties, the Entity List is an important tool to prevent unauthorized trade in items subject to the EAR [Export Administration Regulations.”
Cree added that its LED Products group is suffering due to “global trade uncertainties.”
Cree now projects Wolfspeed revenue at $132 million to $135 million and LED Products at $113 million to $117 million.