Biden Administration Tightens Grip On China's Huawei, Revokes Key Export Licenses From US Chipmakers

Zinger Key Points
  • Biden administration revokes Intel and Qualcomm's licenses to supply chips to Huawei, escalating U.S.-China tech tensions.
  • Qualcomm and Intel shares drop about 1% Tuesday, with the broader semiconductor sector also retreating.

The Biden administration has revoked export licenses that previously allowed major American semiconductor manufacturers, Intel Corp. INTC and Qualcomm Inc. QCOM, to supply essential chips to Huawei.

This decision, as confirmed by the Commerce Department to the Financial Times on Tuesday, marks a pivotal escalation in the U.S. strategy to curb the technological ascent of the Chinese telecommunications equipment powerhouse.

National Security Concerns At The Forefront

This regulatory crackdown follows persistent concerns voiced by U.S. national security officials regarding Huawei's involvement in facilitating cyber espionage activities, allegations that Huawei consistently denies.

The tightening of restrictions also responds to pressures from Republican lawmakers who have advocated for a more stringent approach toward the Chinese firm. Key political figures, including Marco Rubio (R-FL), vice-chair of the Senate Intelligence Committee, and Rep. Elise Stefanik (R-NY), have explicitly urged for such measures in recent communications with U.S. Commerce Secretary Gina Raimondo.

The decision to revoke these licenses reflects broader U.S. anxieties about Huawei’s capabilities in developing advanced technological components, despite previous restrictions. Huawei's recent unveiling of the Mate 60 Pro smartphone, equipped with sophisticated chip technology, has particularly alarmed U.S. officials.

Market Reactions: Following the Commerce Department’s decision, shares of Qualcomm and Intel saw a dip, each falling by about 1% on Tuesday.

The broader iShares Semiconductor ETF SOXX retreated 0.8%, snapping three straight sessions of gains.

Chart: Qualcomm, Intel End Tuesday Session At Intraday Lows

Other U.S. chipmakers may also be affected by the renewed export restrictions to the Chinese tech powerhouse.

Other than Intel and Qualcomm, major technology firms such as Broadcom Inc. AVGO, Micron Technology Inc. MU, Advanced Micro Devices AMD and Microsoft Corp. MSFT are also listed as U.S. suppliers to Huawei, according to an infographics shared by Reuters.

Notably, smaller players like Lumentum Holdings Inc. LITE and Qorvo Inc. QRVO are substantially reliant on Huawei, with approximately 11% of their total revenue stemming from orders from the Chinese tech giant.

Read now: As US Tightens Screws On Nvidia, Intel Chip Exports To China, Huawei’s Latest Phone Uses Made-In-China Chipset

Photo: Shutterstock

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