Intel and Qualcomm were on the verge of losing ground Wednesday after the United States revoked export licenses needed for both companies to sell chips to China-based PC and mobile phone maker Huawei.
Intel said in a filing with the Securities and Exchange Commission on Wednesday that the Department of Commerce has “revoked certain authorizations for the export of consumer-related items to customers in China, effective immediately.”
Intel declined to confirm that the customer in question was Huawei, but Qualcomm did.
“The Department of Commerce has revoked certain Huawei export licenses in the industry, including one of ours,” Qualcomm said in a statement. “We continue to comply with all applicable export control regulations.”
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Intel said it expects second-quarter revenue to be below the midpoint of its original guidance range of $12.5 billion to $13.5 billion. China accounted for 27% of Intel’s revenue in 2023, and 6% of its 2023 revenue was dependent on export control approvals, according to securities filings. China accounted for 62% of Qualcomm’s revenue in 2023, according to the filing.
Qualcomm indicated potential problems with exports to Huawei in its 2023 10-K filing with the SEC.
“We currently have an export license from the U.S. Department of Commerce authorizing us to sell 4G and other integrated circuit products, excluding 5G products, including Wi-Fi products, to Huawei,” the company said in a filing. mentioned in. “Recent reports indicate that the Department of Commerce will not grant Huawei a new license to sell and is considering the possibility of revoking existing licenses.”
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Asked for comment, the Commerce Department confirmed in a statement that it had revoked certain licenses for exports to Huawei. The department said it is “continually evaluating how our nation’s administration can best protect our national security and foreign policy interests, given the ever-changing threat environment and technological landscape.” “As part of this process, we may revoke export licenses, as we have done in the past.”
Bernstein analyst Stacey Rasgon said in a research note Wednesday morning that Qualcomm had previously said Huawei’s revenue contribution was already modest and would likely not exceed hundreds of millions of dollars a year. He estimates the issue will affect Qualcomm’s earnings by about 15 cents a share, a minor hit for a company expected to earn more than $11 a share in 2025.
Rasgon estimated Intel’s exposure would be $500 million to $1 billion in revenue, or about 5 cents to 10 cents per share, on an annual basis. “Overall, we conclude that the first-order effects of further Huawei sanctions are manageable,” he said. Rasgon reiterated his outperform rating on Qualcomm and market perform stance on Intel.
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Intel shares fell 2.5% to $29.91 in afternoon trading. Qualcomm fell 0.3% to $179.53.
Email Angela Palumbo (angela.palumbo@dowjones.com) and Eric J. Savitz (eric.savitz@barrons.com).
