KeyBanc Upgrades Qualcomm On Potential Benefit From HiSilicon Ban

Qualcomm, Inc. QCOM could be a beneficiary of the recent export restrictions placed on Chinese semiconductor manufacture HiSilicon Technologies, according to KeyBanc Capital Markets.

The Qualcomm Analyst

KeyBanc’s John Vinh upgraded Qualcomm from Sector Weight to Overweight, with an unchanged price target of $105.

The Qualcomm Thesis

With the restrictions placed on HiSilicon, Huawei will be unable to procure new silicon internally and may turn to Qualcomm’s Snapdragon chipset for its flagship 2021 smartphones, Vinh said in the note.

This will require Qualcomm to obtain an export license from the Bureau of Industry and Security (BIS). The analyst added that the license is likely to be granted and could be accompanied by a licensing agreement between Huawei and Qualcomm.

Vinh expects this to add an incremental $2.33 billion to Qualcomm’s revenues and $1.13 per share to its earnings. He raised the revenue and earnings estimates for fiscal 2021 to from $23.7 billion to $27.9 billion and from $4.85 per share to $6.64 per share.

The analyst said Qualcomm stands to benefit even if the export license is not approved. He explained that the license not being approved will impact Huawei and other Chinese smartphone manufacturers, which are already Qualcomm’s customers and licensees, will gain share.

QCOM Price Action

Shares of Qualcomm traded higher by 1.2% to $80.25 at time of publication Thursday.

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