Dutch health tech company Philips said on Wednesday its Q3 core profit would drop, due to supply-chain shortages. In a more pessimistic view, the company sees its sales falling through the end of the year.

As an immediate effect, its shares slid to a decade low, felling as much as 12%, the lowest level since mid-2012.

The company expects to book a €1.3 billion impairment charge on Philips Respironics, its sleep and respiratory care business, after revising its financial forecast for the unit.

Philips’ market value has now fallen below €13 billion, as against €46 billion last spring.

Market capitalisation of Philips and its medical-technology peer Siemens Healthineers. Source: Refinitiv Datastream; Data to Oct. 12 | Reuters Breakingviews | Liam Proud

This is a red flag for the wider stock market, where the lack of semiconductors is making its first damage. Investors are reminded that problems may linger.

Since April 2021, the Amsterdam-based group has struggled to deliver hospital products such as MRI scanners, because it couldn’t get hold of components like chips.

Also, the group has been forced to recall some breathing devices and ventilators over concerns that a foam part could degrade and become toxic.

On Saturday, CEO Frans van Houten is to be formally replaced by Roy Jakobs, who needs to work through the bottlenecks.

Supply-chain problems are the key issue to be dealt with, mainly essential components like semiconductors. Philips can’t sell a patient-monitoring device without a key part, for example.

And its blockages will worry other heavy chip users, like BMW, Ford Motor and Volkswagen, even Siemens, who already cited electronic-component shortages.

All these companies and more will be struggling to find the components for existing orders just as they face lower demand for new ones.