Amid Layoffs, Xilinx Warns of Pause in 5G Activities

Xilinx sells chips for 5G basestations, and had grand ambitions for its sales in the space. But last week the company announced layoffs and a 'pause' in 5G buildouts.

Mike Dano, Editorial Director, 5G & Mobile Strategies

February 5, 2020

2 Min Read
Amid Layoffs, Xilinx Warns of Pause in 5G Activities

Xilinx, once a darling of 5G bulls on Wall Street, has hit hard times. The company said it will cut 7% of its workforce partly due to an unexpected slowdown in its critical 5G business.

"There seems to be a pause now" among operators deploying 5G, said Xilinx CEO Victor Peng during the company's quarterly conference call with analysts last week, according to a Seeking Alpha transcript of his remarks. He said the pause stretches across the globe, including among US operators, but that he expects activity to pick up again shortly.

As noted by the Wall Street Journal, Xilinx specializes in a type of chip called field programmable gate arrays (FPGAs). Such chips have proven popular in 5G basestations, among other products.

Xilinx has been viewed as a kind of bellwether for 5G among investors on Wall Street. The company's stock reached its high point in April of around $137 per share, but has fallen to around $88 per share today.

Xilinx, based in San Jose, Calif., has been battered by a number of factors including the Trump administration's actions against China and Huawei. While Xilinx hasn't disclosed the exact extent of its business with Huawei, the WSJ reported that analysts peg the Chinese vendor contributing around 6% to 8% of Xilinx's revenue.

"The unprecedented change in US-China relations and trade clearly has an impact on the industry, and specifically, our business," Peng said during the call.

In its most recent quarter, Xilinx reported revenues of $723 million, down 13% quarter over quarter and 10% year over year.

As reported by MarketWatch, the Wall Street analysts at Raymond James argued that Xilinx's initial revenue targets last year were "imprudently aggressive."

"The good news is that the bar has now been reset, and lower expenses will provide a basis for earnings growth once business does begin to improve," the Raymond James analysts added.

Mike Dano, Editorial Director, 5G & Mobile Strategies, Light Reading | @mikeddano

About the Author(s)

Mike Dano

Editorial Director, 5G & Mobile Strategies, Light Reading

Mike Dano is Light Reading's Editorial Director, 5G & Mobile Strategies. Mike can be reached at [email protected], @mikeddano or on LinkedIn.

Based in Denver, Mike has covered the wireless industry as a journalist for almost two decades, first at RCR Wireless News and then at FierceWireless and recalls once writing a story about the transition from black and white to color screens on cell phones.

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