Intel and Qualcomm face export blockages to China, eliciting objections from Beijing

The US has revoked export licenses for chip sales to Huawei, impacting Intel's revenue and escalating tensions between the two countries.

On Wednesday, Intel stated that its sales would be affected following the US's revocation of some of its export licenses for a Chinese customer. The move, which Beijing criticized as an overreach in the name of national security, has raised concerns. While Intel didn't disclose the customer's name in its SEC filing, Reuters had reported that the licenses revoked included those enabling Intel and Qualcomm to supply chips for laptops and handsets to Huawei Technologies, a sanctioned Chinese telecoms equipment maker.

The release of Huawei's first AI-enabled laptop, the MateBook X Pro, powered by Intel's new Core Ultra 9 processor in April, faced criticism from Republican lawmakers. They argued that it implied the Commerce Department had authorized Intel to sell the chip to Huawei.

On Wednesday afternoon, Intel's shares dropped by 2.9% to $29.80 after the company announced its expectation of second-quarter revenue to stay within the range of $12.5 billion to $13.5 billion, but below the midpoint. Intel's shares have experienced a nearly 38% decline so far this year.

On Wednesday, Qualcomm also confirmed that one of its export licenses for Huawei had been revoked, although its shares remained flat.

Following a congressional hearing on Wednesday, Commerce Secretary Gina Raimondo told Reuters, "Huawei is a threat," emphasizing that the revocation was not a policy shift. She suggested an increased focus on AI, stating, "Maybe we have an increased focus on AI. And so when we learn more about AI capabilities, that’s when we have to take action." Raimondo added, "So if a chip that we previously licensed, for example, now we discover had AI capabilities, we’re going to revoke the license."

The Chinese foreign ministry, known for its criticism of US efforts to restrict tech exports to China, opposed the recent move, stating that the US was "over-stretching the concept of national security and abusing export controls to suppress Chinese companies without justification."

In 2019, the United States added Huawei to a trade restriction list over concerns about potential spying on Americans, as part of broader efforts to limit China's military advancements. Being on this list requires Huawei's suppliers to obtain a special, difficult-to-obtain license before shipping goods.

The recent restrictions imposed on Huawei are President Joe Biden's latest endeavor to prevent China from accessing the United States' most sensitive and sophisticated "crown jewel" technology, aiming to counter Beijing's technological advancements.

Biden has employed export bans, diplomatic efforts with allied democracies, and other measures to hinder China's rapid progress in technological fields such as quantum computing and robotics. He has even communicated this strategy to Chinese leader Xi Jinping, framing it as the new normal in an era defined by competition between two nations with contrasting political systems.