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Xilinx Stock Soars As Chip Maker Forecasts Rise In Revenue

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Xilinx Stock Soars As Chip Maker Forecasts Rise In Revenue

Xilinx Inc (NASDAQ: XLNX) stocks soared in the after-hours session as the California-based chip manufacturer updated its financial guidance for the first quarter of FY 2021. 

What Happened

Xilinx's revenue for the first quarter of FY 2021 was revised upwards between $720 million and $734 million, which exceeds the previous estimates of $660 to $720 million. 

Victor Peng, CEO of Xilinx Inc, said, “While we have seen some Covid-19 related impacts during the June quarter, our business has generally performed well overall, with stronger than expected revenues in our Wired and Wireless Group and Data Center Group more than offsetting weaker than expected revenues in our consumer-oriented end markets, including automotive, broadcast, and consumer.”

Peng clarified that the increase in the first-quarter revenues was partly due to “customers accelerating orders following recent changes to the U.S. government restrictions on sales of certain of our products to international customers.” The executive was alluding to the fact that some of Xilinx’s chips are used in Huawei equipment. 

Xilinx shares rose over 7% after the company released its revised guidance for Q1 2021.

Why It Matters

Xilinx is a leader in field-programmable gate array (FPGA) chips, used in hardware upgrade cycles, for which Huawei has been a large customer.

Huawei is on the entity list of the United States Department of Commerce since May 2019 and is barred from receiving shipments of semiconductors.

A Xilinx spokesperson told MarketWatch that export-control changes announced by the U.S. government in April, which affected the company’s revenues, are not included in the latest forecast.

In June, the Commerce Department allowed U.S. companies to work with Huawei in the development of global 5G standards. 

Price Action 

Xilinx shares traded 7.44% higher at $98.80 in the after-hours session on Monday. 

 

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