US revokes licenses of companies trading with Huawei

Three people familiar with the matter said the U.S. has revoked licenses that allowed companies, including Intel (INTC.O), to open a new tab and Qualcomm (QCOM.O), to open a new tab to ship chips used for laptops and handsets to sanctioned Chinese telecoms equipment maker Huawei Technologies.

A fourth person said some of the companies were notified on Tuesday that their licenses were revoked effective immediately. The U.S. Commerce Department confirmed earlier in the day that it had revoked some licenses but stopped short of naming the companies.

A spokesperson for Intel declined to comment. Qualcomm did not respond to a request for comment, and Huawei did not respond immediately.

The move comes after the release last month of Huawei's first AI-enabled laptop, the MateBook X Pro powered by Intel's new Core Ultra 9 processor.

The laptop launch drew fire from Republican lawmakers, who said it suggested that the Commerce Department had given Intel the green light to sell the chip to Huawei.

The Commerce Department said in a statement, "We have revoked certain licenses for exports to Huawei," declining to specify which ones it had withdrawn.

The Commerce Department's move, first reported by Reuters, comes after concerted pressure by Republican China hawks in Congress who have been urging the Biden administration to take more brutal action to thwart Huawei.

"This action will bolster U.S. national security, protect American ingenuity, and diminish Communist China’s ability to advance its technology," Republican Congresswoman Elise Stefanik said in a statement.

The move could hurt Huawei, which still relies on Intel chips to power its laptops, and U.S. suppliers that do business with the company.

Intel also faces weak demand for its traditional data center and PC chips. In May, its stock market value lost $11 billion after it forecasted second-quarter revenue and profit below market estimates. Huawei was placed on a U.S. trade restriction list in 2019 amid fears it could spy on Americans. This was part of a broader effort to handicap China's ability to bolster its military. Being added to the list means the company's suppliers must seek an exceptional, difficult-to-obtain license before shipping.

Even so, suppliers to Huawei have received licenses worth billions of dollars to sell Huawei goods and technology, including one particularly controversial authorization issued by the Trump administration. This authorization has allowed Intel to ship central processors to Huawei for use in its laptops since 2020.

Qualcomm has sold older 4G chips to handsets since receiving U.S. officials' licenses in 2020. In a regulatory filing earlier this month, Qualcomm said it did not expect to receive more chip revenue from Huawei beyond this year.

However, Qualcomm still licenses its portfolio of 5G technologies to Huawei, which began using a 5G chip last year designed by its HiSilicon unit, which most analysts believe is manufactured in violation of U.S. sanctions.

Qualcomm said in the filing this month that its patent deal with Huawei expires early in Qualcomm's fiscal 2025 and that it has started negotiations to renew the deal.

Critics argue such licenses have contributed to the company's resurgence. Huawei shocked the industry last August with a new phone powered by a sophisticated chip manufactured by Chinese chipmaker SMIC (0981. HK), opening new tab, despite U.S. export restrictions on both companies.

According to research firm Counterpoint, the phone helped Huawei smartphone sales spike 64% year over year in the first six weeks of 2024.

Huawei's smart car component business has also contributed to its resurgence, with the company notching its fastest revenue growth in four years in 2023.

Source: Reuters