US revokes Intel and Qualcomm licenses to sell chips to Huawei

(Bloomberg) — The United States revoked licenses for Huawei Technologies Co. to buy semiconductors from Qualcomm Inc. and Intel Corp., according to people familiar with the matter, tightening export restrictions against the Chinese telecommunications equipment manufacturer.

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The decision will affect sales of chips for Huawei phones and laptops, according to the people who discussed the decision on condition of anonymity. House Foreign Affairs Committee Chairman Michael McCaul confirmed the administration's decision in an interview Tuesday. He said the move was key to preventing China from developing advanced artificial intelligence.

That blocks all chips sold to Huawei, said McCaul, a Texas Republican who has been briefed on the license revocations for Intel and Qualcomm. These are two companies that we have always been afraid of being a little too close to China.

While the decision may not affect a significant volume of chips, it underscores the U.S. government's determination to restrict China's access to a wide range of semiconductor technologies. Officials are also considering sanctions against six Chinese companies they say could supply chips to Huawei, which has been on the U.S. trade restriction list since 2019.

Intel expects its revenue to fall below the midpoint of its previously guided range of $12.5 billion to $13.5 billion in the second quarter due to the ban, it said Wednesday in a press release.

Qualcomm confirmed in a statement Wednesday that Commerce had revoked one of its sales licenses to Huawei and said it would continue to comply with all applicable export control regulations.

Intel shares fell 2.5% to $29.91 as of 10:45 a.m. in New York. Qualcomm shares fell after Intel's announcement, but later recovered.

Withdrawing export licenses constitutes economic coercion and violates World Trade Organization rules, China's Ministry of Commerce said in a statement on Wednesday.

The US Commerce Department confirmed the withdrawal of some export licenses to Huawei, but declined to provide details. The Democratic administration has come under pressure to do more to stop Huawei and other Chinese technology companies after signs of progress in the country's semiconductor development.

We continually evaluate how our controls can best protect our national security and foreign policy interests, the agency said in a statement Tuesday.

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Qualcomm recently said its business with Huawei was already limited and would soon be reduced to nothing. It was allowed to supply the Chinese company with chips that provide older 4G network connections. It is prohibited to sell devices allowing more advanced 5G access.

That's not much, said Stacy Rasgon, an analyst at Sanford C. Bernstein. Qualcomm has already said that Huawei's business will disappear anyway.

Huawei is not on Qualcomm's list of top 10 customers, according to Bloomberg's supply chain analysis. It is also not in the list of major Intel customers.

Rasgon points out that Huawei only ships about five million desktops and laptops a year, or 2% of the market. So even if Intel supplies all the processors for these, the impact on Intel's profits will be minimal.

The United States is also pressuring its allies, including Japan, the Netherlands, South Korea and Germany, to tighten restrictions on the sale and servicing of chipmaking tools in China, with Huawei being the main target of this effort.

McCaul and other Republican lawmakers, including House Republican Conference Chairwoman Elise Stefanik and Sen. Marco Rubio, have urged Commerce to revoke licenses allowing companies to sell chips to Huawei. Their calls intensified after the company unveiled a smartphone powered by an advanced processor made in China while Commerce Secretary Gina Raimondo was visiting China in August.

The Biden administration has opened an investigation into the purported 7-nanometer chip, which a Bloomberg teardown revealed was made by Chinese chipmaker Semiconductor Manufacturing International Corp. SMIC could have violated U.S. law if it had provided the chip to Huawei, a Commerce official said earlier. year.

The chip was made using Dutch and American technologies, Bloomberg reported, indicating that China still depends on foreign tools to produce its most advanced semiconductors despite Beijing's efforts to build a supply chain complete national.

–With help from Peter Elstrom and Ian King.

(Updated with Qualcomm comments in sixth paragraph)

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