Intel, Qualcomm say exports to China blocked as Beijing objects

Illustration shows Intel logo

By David Shepardson and Stephen Nellis

(Reuters) -Intel said on Wednesday its sales would take a hit after the U.S. revoked some of the chipmaker's export licenses for a customer in China, in a move Beijing complained was going too far in the name of national security.

Intel did not disclose the name of the Chinese customer that had licenses canceled in its filing with the Securities and Exchange Commission, but Reuters had reported on Tuesday the U.S. has revoked licenses that allowed companies, including Intel and Qualcomm, to ship chips used for laptops and handsets to sanctioned Chinese telecoms equipment maker Huawei Technologies.

The release of Huawei's first AI-enabled laptop in April, the MateBook X Pro powered by Intel's new Core Ultra 9 processor, drew fire from Republican lawmakers, who said it suggests that the Commerce Department had given the green light to Intel to sell the chip to Huawei.

Intel's shares were down 2.9% at $29.80 on Wednesday afternoon after the company said it expects revenue for the second quarter to remain in the range of $12.5 billion to $13.5 billion, but below the midpoint. Intel shares have lost nearly 38% so far this year.

Qualcomm also said on Wednesday that one of its export licenses for Huawei had been revoked; its shares were flat.

"Huawei is a threat," Commerce Secretary Gina Raimondo told Reuters after a congressional hearing on Wednesday, adding that the move was not a change in policy.

"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," she said. "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, which has criticized every effort by the U.S. to crack down on tech exports to China, said in a statement it opposed the move and that the U.S. was "over-stretching the concept of national security and abusing export controls to suppress Chinese companies without justification."

The United States placed Huawei on a trade restriction list in 2019 amid fears it could spy on Americans, part of a broader effort to handicap China's ability to bolster its military. Joining the list means the company's suppliers have to seek a special, difficult-to-obtain license before shipping.

The new restrictions on Huawei are President Joe Biden's latest effort to deny China access to the United States' most sensitive and sophisticated “crown jewel” technology in a bid to thwart Beijing.

Biden has used export bans, diplomacy with like-minded democracies and other means to stifle China’s swift technological advances in areas from quantum computing to robotics, and even explained the strategy to Chinese leader Xi Jinping as a new normal in an era of competition between two nations with different political systems.

(Reporting by Aditya Soni in Bengaluru, Stephen Nellis in San Francisco and Trevor Hunnicutt in Washington; Writing by Chris Sanders; Editing by Chizu Nomiyama, Nick Zieminski and Matthew Lewis)