Intel's stock drops after Biden administration bans some sales to China's Huawei

By Tomi Kilgore

Qualcomm also has an export license revoked, but stock barely slipped as revenue impact was already noted

Shares of Intel Corp. took a hit Wednesday after the semiconductor giant disclosed that the Biden administration will no longer allow the sale of some of the company's chips to a customer in China.

As a result of the ruling by the U.S. Department of Commerce, which is effective immediately, the company provided a second-quarter revenue outlook that was below current Wall Street expectations.

The stock (INTC) fell 2.6% in morning trading, to put it on track for the first sub-$30 close since June 5, 2023.

"On May 7, 2024, the U.S. Department of Commerce informed Intel Corporation (the 'company') that it was revoking certain licenses for exports of consumer-related items to a customer in China, effective immediately," Intel said in an 8-K filing with the Securities and Exchange Commission.

Qualcomm Inc. (QCOM) also said Wednesday that it was also subject to an export ban to China-based telecommunications services and products company Huawei.

"The Commerce Department has revoked certain export licenses for Huawei in our industry, including one of our licenses," Qualcomm said in an emailed statement to MarketWatch. "We will continue to comply with all applicable export control regulations."

But Qualcomm's stock eased just 0.1% in morning trading, as the chipmaker has said in its quarterly filing earlier this month that it doesn't expect to receive product revenue from Huawei "beyond the current calendar year."

Meanwhile, Intel said Wednesday that following the Department of Commerce's decision, it still expects second-quarter revenue to be between $12.5 billion and $13.5 billion, "but below the midpoint."

The current FactSet consensus is $13.1 billion, or above the midpoint.

Bernstein analyst Stacy Rasgon wrote in a note following the report that Intel held a license to ship x86 PC chips to Huawei and Qualcomm has been supplying Huawei with 4G chips under an existing license.

Rasgon reiterated his market-perform rating and $35 target on Intel's stock, and his outperform rating and $220 target on Qualcomm's stock.

"Overall, we conclude that the first-order impact of further Huawei sanctions seems manageable," Rasgon wrote.

Intel's stock has tumbled 40.5% year to date while Qualcomm shares have rallied 24.4%. In comparison, the PHLX Semiconductor Index SOX has advanced 14.2% this year and the S&P 500 index SPX has gained 8.7%.

-Tomi Kilgore

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05-08-24 1121ET

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