The US has revoked licenses allowing Huawei Technologies Co. to buy semiconductors from Qualcomm Inc. and Intel Corp., according to people familiar with the matter, further tightening export restrictions against the Chinese telecom equipment maker.

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

“It’s blocking any chips sold to Huawei,” said McCaul, a Texas Republican who was briefed about the license revocations for Intel and Qualcomm. “Those are two companies we’ve always worried about being a little too close to China.”

While the decision may not affect a significant volume of chips, it underscores the US government’s determination to curtail China’s access to a broad swathe of semiconductor technology. Officials are also considering sanctions against six Chinese firms that they suspect could supply chips to Huawei, which has been on a US trade restrictions list since 2019.

Intel expects 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 in a statement on Wednesday.

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

Intel shares fell 2.5% to $29.91 at 10:45 a.m. in New York. Shares of Qualcomm dipped following Intel’s announcement but later recovered.

Withdrawing the export licenses is “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 “certain licenses” for exports to Huawei, but declined to offer specifics. The Democratic administration has come under pressure to do more to stop Huawei and other Chinese tech companies after signs of progress in the country’s semiconductor development.

“We continuously assess how our controls can best protect our national security and foreign policy interests,” the agency said in a statement Tuesday.

Qualcomm recently said that its business with Huawei is already limited and will soon shrink to nothing. It has been allowed to supply the Chinese company with chips that provide older 4G network connections. It’s prohibited from selling ones that allow more advanced 5G access.

“This is small,” said Stacy Rasgon, an analyst at Sanford C. Bernstein. “Qualcomm has already said that the Huawei business is going away anyway.”

Huawei doesn’t rank in Qualcomm’s list of top 10 customers, according to Bloomberg supply chain analysis. It also doesn’t feature in Intel’s list of top customers.

Rasgon points out that Huawei only ships about five million desktop and notebook computers annually, or 2% of the market, so even if Intel has been supplying all the processors for those the impact on Intel’s earnings will be minimal.

The US is also pressing allies including Japan, the Netherlands, South Korea and Germany to tighten curbs on selling and maintaining chip manufacturing tools in China — with Huawei as the main target of that effort.

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

The Biden administration has opened a probe into the “purported” 7-nanometer chip, which a Bloomberg teardown revealed was made by Chinese chipmaker Semiconductor Manufacturing International Corp. SMIC may have violated US law if it supplied that chip to Huawei, a Commerce official said earlier this year.

The chip was manufactured using Dutch and American technology, Bloomberg has reported, indicating that China is still reliant on foreign tools to produce its most advanced semiconductors despite Beijing’s efforts to build a full domestic supply chain.

By: DocMemory
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