Micron Shares Fall After Chipmaker Halts Shipments to Huawei

Micron Technology Inc. shares fell after the largest U.S. chipmaker said it recently halted shipments to Chinas Huawei Technologies Co.

Micron also cut capital spending plans, warned about weaker demand from some corporate customers and forecast possible oversupply in a key market next year.

Shares of the company dropped 3.6% in extended trading on Tuesday. The stock is down almost 6% for the year, while the benchmark Philadelphia Semiconductor Index is up more than 20%.

In a presentation, Micron said it halted shipments to Huawei on Sept 14. The Chinese tech giant has been hit recently by more U.S. government action designed to cut it off from suppliers. It accounted for about 10% of Micron‘s sales in the U.S. company’s fiscal fourth quarter.

Micron also warned that demand from corporations was weaker due to lower IT spending and somewhat higher inventories at some customers. Smartphone, auto and consumer end markets have started to recover and cloud and laptop demand continues to be healthy, Micron added in the presentation.

Capital expenditures will total about $9 billion in 2021, down from earlier plans, Micron said during a conference call with analysts.