What happened
Shares of semiconductor design outfit Himax Technologies (HIMX 3.16%) took a steep 19.6% hit last week. It caps off a terrible June for the market, and the worst first half of a year since 1970. If you're keeping score, the S&P 500 was down 19.7%, the Nasdaq Composite was down 25.9%, and Himax stock was down 54.8% so far in 2022 through July 1.
NASDAQ: HIMX
Key Data Points
So what
Semiconductor businesses in particular are under siege right now, especially those like Himax that provide circuitry for consumer electronics. After two years of heavy spending on work-from-home and other at-home products, the global consumer is shifting its wallet toward more basic items as inflation rages.
In light of this, Himax updated its Q2 2022 financial guidance lower on June 20. Himax management now thinks revenue will decline 22% to 27% from Q1 2022, compared with previous guidance for a 16% to 20% sequential decline before. It appears it took a few days for the market to digest the news.
Now what
As if to reinforce the deteriorating short-term outlook for consumer electronics, memory-chip maker Micron Technology (MU +5.08%) issued weaker-than-expected financial guidance on June 30 as well. Micron said there's too much inventory on the market for consumer devices, and it could take some time to work through this excess. Micron is one of the more cyclical semiconductor stocks out there, given that it's a top manufacturer of commoditized chips used in more complex computing systems.
Himax falls into this camp as well, since it provides basic image processing chips for TVs, smartphones, autos, and the like. With consumer spending taking a hit, expect more volatility ahead for this small chip designer.
