As of 1:30 p.m. ET, both Nvidia (NVDA 1.33%) and Skyworks Solutions (SWKS 0.39%) are down 4.2%, while Qualcomm (QCOM -0.48%) has its own special problem that is driving its stock down an even worse 5.1%.
Let's address that specific problem before we get to the bigger picture.
This morning -- four days after investment bank JPMorgan removed Qualcomm from its "Analyst Focus List" on worries about depressed smartphone demand -- TheFly.com is reporting that JP has gone a step farther and actually chopped its price target on Qualcomm stock by 15%, lowering it to $205 a share.
Last week, StreetInsider.com quoted JP blaming "fresh coronavirus lockdowns in China and rising cost of goods due to the Ukraine conflict" for weak demand for "low- to mid-end Android handsets" that use Qualcomm technology. Today, the analyst got even more specific, predicting that "QTL revenue" (high-margin licensing revenue) looks weak in 2022, and that both QCT (that's chipsets) revenue and profit margins are at risk.
So it's no wonder Qualcomm is taking it on the chin today.
As for the others, well, there doesn't appear to be any particularly new "news" on either Nvidia or Skyworks. That being said, if JP is right about demand for smartphones, both of these companies may suffer from the same factors affecting Qualcomm. Additionally, there's the broader risk to semiconductor supply chains coming out of Belgium. As I described yesterday, a 3M factory that produces 80% of the world's semiconductor coolant used when etching semiconductor chips has been shut down since early March -- and now that shutdown has been extended to an "indefinite" duration.
I admit that I'm not enough of a semiconductor engineer to know precisely how big of a deal this is, and how much it's likely to impact the production of Nvidia, Qualcomm, and Skyworks chips in the long term. All I really know is that, according to news sources Focus Taiwan and BusinessKorea, 3M has stated it still has enough semiconductor coolant stockpiled to keep its customers' production lines going for another one to three months.
After that, things could start to get dicey -- anything from slowing down chip production (assuming coolant is a like-to-have rather than a must-have for semiconductor makers, and that instead of cooling chips artificially, they could be allowed to air-cool instead, albeit at a slower production pace) to shutting down production at fabs that can't get the coolant they need.
Either way, this unexpected supply chain glitch appears to hold the potential to extend the global semiconductor shortage even further, with results that could be either good or bad for semiconductor companies. Today's sell-off, I suspect, is in part reflective of similar uncertainty among investors.