How the US-China trade war is felt stateside: Xilinx trims workforce after lucrative Huawei sales pipe blocked

'A combination of losing Huawei and slower than anticipated ramp in 5G'

A small round of layoffs at Silicon Valley's Xilinx was the result of the US government's ongoing war on Huawei, one of the FPGA designer's top customers.

According to the latest California Workforce Adjustment and Retraining Notification (WARN) report [PDF], in late January the semiconductor veteran told Golden State officials, as required by law, that it was cutting the ranks at its San Jose headquarters by 123 staff. Xilinx employs about 4,000 people worldwide.

While the notice does not require companies to state the reason for the layoffs, a spokesperson for Xilinx told The Register the trim was necessary while the FPGA biz recovers from losing Huawei's business after the US government banned the Chinese goliath from buying American components and software. Xilinx applied for licenses to ship parts to Huawei, which have not been approved, cutting off a sizable revenue stream: $50m a quarter prior to the ban-hammer coming down.

Xilinx also blamed a slower than expected uptake in 5G: it had hoped to ship its programmable gate arrays to Huawei and other makers of 5G technology to power next-gen communications systems. The resulting drop in sales forced it to lay some people off. And the biz doesn't expect the situation with Huawei to get any better: even if the ban was lifted this year, the Chinese giant will have shifted to an alternative supplier on its home soil.

A generic silicon wafer in a fab plant

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"The revenue impact mainly came from a combination of losing Huawei and slower than anticipated ramp in 5G," Xilinx said.

"Huawei has historically been one of our largest customers and the trade restrictions on them have resulted in what we have assessed as a more persistent loss of revenue, even if those restrictions are removed."

While much has been made of the hit Huawei took as a result of American policy, less has been made of just how severely the restrictions have harmed suppliers who relied on the Chinese telco giant for their business.

Xilinx previously warned the loss of business from the Huawei sales ban would have an impact on its bottom line. The company's share price has not recovered since spring 2019, prior to the trade ban, falling from roughly $140 apiece to $90.

Other cuts

Xilinx is not the only big brand in Silicon Valley to show up on the WARN report. Also making the list was VMware, which had previously announced the elimination of what turned out to be 211 jobs from its rolls, and Intel whose January job cuts ended up hitting 128 workers, in both cases a tiny fraction of their total workforce. ®

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