STMicro was down 4% at the bottom of Paris' CAC
40, while Infineon fell 3.4% to the bottom of Frankfurt's DAX 30
and AMS was down 4.6% at 0836 GMT.
The selling came after Nikkei Asian Review reported that
Infineon had halted shipments to Huawei after Washington added
the world's No. 2 smartphone maker to a trade blacklist last
week, imposing restrictions that will make it difficult to do
business with U.S. companies.
The report also said STMicro was set to have meetings this week
to discuss whether to continue shipping to Huawei.
Germany's Infineon and France's STMicro, Europe's biggest
chipmakers, had no immediate comment.
Even if companies can continue to sell components without being
subject to U.S. restrictions, any disruption to Huawei's
operations will have a knock-on effect on its suppliers, said
Liberum analyst Janardan Menon.
"In coming months it can broadly be assumed that the Huawei
portion of their (European chip suppliers') business will see
quite a bit of weakness, if the U.S. government does not change
its mind," he said.
The impact will not be uniform because the companies have
different levels of exposure.
The selling was particularly amplified as investors exited
bullish positions built up in the trade-sensitive sector in
recent months as worries about the U.S.-China trade spat eased
and companies forecast a recovery in smartphone demand in the
second half of the year.
"With all of the semis commentary geared into a second-half
recovery, a sizeable customer having supply issues could push
that guidance out," said a trader.
AMS has almost doubled in value this year, while STM has rise
almost 20%, outperforming the pan-European STOXX 600 index.
(GRAPHIC: https://tmsnrt.rs/2WSO19V)
(Reporting by Josephine Mason and Helen Reid, Editing by Helen
Reid and Catherine Evans)
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