Forget Trade War Uncertainty; Xilinx Is Still a Buy
The semiconductor industry has been hit particularly hard by the U.S.-China trade war. With a significant amount of the manufacturing process headed up in the east, but headquarters mostly based in the California Bay Area, chipmakers have been hit with a volley of body blows: cross-border tariffs, a Chinese economic slowdown, and a White House crackdown on Chinese telecom equipment manufacturers ZTE in 2018 and Huawei in 2019.
Despite the significant disruption, Xilinx (NASDAQ: XLNX) has continued to shine. The programmable chipmaker is benefiting from multiple secular tailwinds blowing strong at its back and helping it plow through the treacherous waters of international trade. After the company's fiscal 2020 first-quarter report (the three months ended June 29, 2019), the stock still looks like a best-in-show pick.
Granted, Xilinx's last quarterly performance wasn't perfect. Sales to Huawei were suspended during the middle of the quarter to comply with the trade ban, and a digital memory customer started going through a product transition. That slowed down the top-line rate of growth and put pressure on gross profit margin on product sold.
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