Acacia shares rise on Trump's reversal of Chinese firm ban
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An aerial view of Maynard
Shares of Maynard telecom manufacturer Acacia Communications rose nearly 12% Monday after President Donald Trump said companies can sell equipment to Huawei, just weeks after the Chinese smartphone manufacturer was blacklisted by the U.S. government.
The firm’s shares opened trading Monday at $52.76 after closing at $47.18 Friday. On Tuesday, those prices fell back slightly to under $50.
In May, the U.S. Department of Commerce added Huawei -- the largest telecommunications provider in the world -- to the Bureau of Industry & Security’s Entity List for activities contrary to U.S. national security or foreign policy interest.
To do business with Huawei, companies must obtain a special license from the U.S., but that could be denied if that business is considered to be harmful to U.S. national security for foreign policy.
On Saturday, Trump at the G20 summit in Japan said he would allow U.S. companies to do business with Huawei, but no official action has been taken.
The impact on Acacia’s shares came despite Huawei not being a major customer, making up 1.5% of the company’s total 2018 sales and 1% of the company’s first quarter revenue.
The fluctuations demonstrate how international trade relations and the Trump Administration’s trade policy -- specifically with China -- has had an effect on manufacturing.
Idaho-based Micron Technology, a provider of smartphone components to Huawei, lists Huawei as its largest customer and attributed its 39% third-quarter revenue decline to the ban.
Last year, Chinese telecommunications manufacturer ZTE -- Acacia’s largest customer -- was completely banned from doing business in the U.S., a move driving down Acacia’s stock price and revenue for several months of the year.
That ban was eventually lifted in June after ZTE paid a $1.4-billion fine and agreed to other measures.
WBJ Web Partners
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