and
were losing ground Wednesday after the U.S. revoked export licenses required for the two companies to sell chips to Huawei, the China-based PC and mobile-phone maker.
Intel said in a filing with the Securities and Exchange Commission on Wednesday that the Department of Commerce is “revoking certain licenses for exports of consumer-related items to a customer in China, effective immediately.”
Intel declined to confirm that the customer in question was Huawei, but Qualcomm did.
“The Commerce Department has revoked certain export licenses for Huawei in our industry, including one of our licenses,” Qualcomm said in a statement. “We will 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. In 2023, securities filings show, China accounted for 27% of Intel’s revenue, while 6% of 2023 revenue was dependent on export-control authorizations. China accounted for 62% of Qualcomm’s revenue in 2023, filings show.
Qualcomm hinted at a potential issue with exporting to Huawei in its 2023 10-K filing with the SEC.
“We currently have export licenses from the U.S. Department of Commerce that allow us to sell 4G and other integrated circuit products, including Wi-Fi products, but excluding 5G products, to Huawei,” the company said in the filing. “Recent news reports have indicated that the Department of Commerce is considering not granting any new licenses for sales to Huawei and potentially revoking existing licenses.”
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Asked to comment, the Commerce Department confirmed in a statement that it revoked certain licenses for exports to Huawei. “We continuously assess how our controls can best protect our national security and foreign policy interests, taking into consideration a constantly changing threat environment and technological landscape,” the department said. “As part of this process, as we have done in the past, we sometimes revoke export licenses.”
Bernstein analyst Stacy Rasgon said in a research note Wednesday morning that Qualcomm had previously said that Huawei had already become a minor contributor to revenue, likely not more than a few hundred million dollars annually. He estimates the impact of the issue on Qualcomm’s earnings to be about 15 cent a share, a minor hit for a company expected to earn more than $11 a share in fiscal 2025.
Rasgon estimated Intel’s exposure at between $500 million and $1 billion in revenue on an annualized basis, or about five to 10 cents a share in earnings. “Overall we conclude that the first-order impact of further Huawei sanctions seems manageable,” he wrote. Rasgon repeated an Outperform rating on Qualcomm and his Market Perform stance on Intel.
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Shares of Intel were down 2.5% to $29.91 afternoon trading. Qualcomm was off 0.3% to $179.53.
Write to Angela Palumbo at angela.palumbo@dowjones.com and Eric J. Savitz at eric.savitz@barrons.com
