US revokes Intel, Qualcomm licenses to sell chips to Huawei

The U.S. has revoked licenses allowing Huawei Technologies Co. to buy semiconductors from Qualcomm Inc. and Intel Corp., according to people familiar with the matter, further tightening export restrictions against the Chinese telecom equipment maker.

The decision will affect sales of chips for use in Huawei phones and laptops, according to the people, who discussed the move on condition of anonymity. House Foreign Affairs Committee Chairman Michael McCaul confirmed the administration’s decision in an interview Tuesday. He said the move is key to preventing China from developing advanced artificial intelligence.

“It’s blocking any chips sold to Huawei,” said McCaul, a Texas Republican who was briefed about the license revocations for Intel and Qualcomm. “Those are two companies we’ve always worried about being a little too close to China.”

While the decision may not affect a significant volume of chips, it underscores the U.S. government’s determination to curtail China’s access to a broad swathe of semibest conductor technology. Officials are also considering sanctions against six Chinese firms that they suspect could supply chips to Huawei, which has been on a U.S. trade restrictions list since 2019.

Intel expects revenue to fall “below the midpoint” of its previously guided range of $12.5 billion to $13.5 billion in the second quarter due to the ban, it said in a statement on Wednesday.

Qualcomm confirmed in a statement Wednesday that Commerce had revoked one of its licenses to sell to Huawei and said that it “will continue to comply with all applicable export control regulations.”

Withdrawing the export licenses is “economic coercion” and violates World Trade Organization rules, China’s Ministry of Commerce said in a statement on Wednesday.

The U.S. Commerce Department confirmed the withdrawal of “certain licenses” for exports to Huawei, but declined to offer specifics. The Democratic administration has come under pressure to do more to stop Huawei and other Chinese tech companies after signs of progress in the country’s semiconductor development.

“We continuously assess how our controls can protect our national security and foreign policy interests,” the agency said in a statement Tuesday.

Qualcomm recently said that its business with Huawei is already limited and will soon shrink to nothing. It has been allowed to supply the Chinese company with chips that provide older 4G network connections. It’s prohibited from selling ones that allow more advanced 5G access.

“This is small,” said Stacy Rasgon, an analyst at Sanford C. Bernstein. “Qualcomm has already said that the Huawei business is going away anyway.”

Huawei doesn’t rank in Qualcomm’s list of top 10 customers, according to Bloomberg supply chain analysis. It also doesn’t feature in Intel’s list of top customers.

Rasgon points out that Huawei only ships about five million desktop and notebook computers annually, or 2% of the market, so even if Intel has been supplying all the processors for those the impact on Intel’s earnings will be minimal.

The U.S. is also pressing allies including Japan, the Netherlands, South Korea and Germany to tighten curbs on selling and maintaining chip manufacturing tools in China – with Huawei as the main target of that effort.

McCaul and other Republican lawmakers, including House Republican Conference Chairwoman Elise Stefanik and Senator Marco Rubio, have urged Commerce to revoke licenses for companies to sell chips to Huawei. Their calls escalated after the company unveiled a smartphone powered by an advanced, made-inChina processor while Commerce Secretary Gina Raimondo was visiting China in August.

The Biden administration has opened a probe into the “purported” 7nanometer chip, which a Bloomberg teardown revealed was made by Chinese chipmaker Semiconductor Manufacturing International Corp. SMIC may have violated U.S. law if it supplied that chip to Huawei, a Commerce official said earlier this year.

The chip was manufactured using Dutch and American technology, Bloomberg has reported, indicating that China is still reliant on foreign tools to produce its most advanced semiconductors despite Beijing’s efforts to build a full domestic supply chain.

After a long stretch of high inflation, the Bank of England finally has its 2% inflation target firmly within its sights.

The central bank said Thursday that it expected inflation to reach its target in two years, and then go even lower, a forecast that comes as policymakers inch toward cutting interest rates.

The majority of the bank’s nine-person ratesetting committee voted this week to hold rates at 5.25%, the highest since early 2018 and where they have been for nine months. But two members voted to cut rates, compared with just one at the previous meeting in March. And Andrew Bailey, the bank’s governor, added that, although it was too soon to cut interest rates this week, the slowdown in inflation had been “encouraging.”

Inflation has been in line with expectations recently, which is “an indication that we are now getting back to more normal times – at least compared to the highly unusual period we have been living through with a global pandemic and a major war in Europe,” Bailey said at a news conference.

Before they cut rates, policymakers are waiting for more data to determine if they are “sufficiently confident” that inflation is on track.

By the bank’s next meeting in June, policymakers will have much more economic information, including two months of inflation and labor market reports.

“A change in bank rate in June is neither ruled out nor a fait accompli,” Bailey said.

Investors have recently been betting that the Bank of England would cut rates in August and one more time by the end of the year. After the announcement Thursday, expectations for a cut in June grew, with markets implying a roughly 50% probability of a move.

For much of the next year and a half, the bank expects inflation to be around 2.5%. But inflation will fall to 1.9% in early 2026, the bank forecast, and 1.6% in three years. Though inflation has retreated a long way from its recent peak, when it climbed above 11% in late 2022, the central bank is wary of prematurely declaring victory.

Like many other central banks, the Bank of England is trying to find the delicate balance between cutting interest rates as inflation slows toward their targets and not overly easing monetary policy because of the risk of resurging inflationary pressures.

The United States has provided a potential warning. The Federal Reserve is expected to hold off on rate cuts as data shows price pressures are still strong in the U.S. In March, consumer prices rose 3.5% from a year earlier, higher than economists’ forecast. But across Europe, confidence is growing that high inflation has dissipated and rate cuts could support the weak economy. On Wednesday, Sweden’s central bank cut rates, and policymakers at the European Central Bank have said they expect to follow suit next month.