Science & Technology

Intel Reportedly Survives Bid to Halt Millions in Sales to China’s Huawei

Intel survived an attempt to stop the sale of chips to Huawei for hundreds of millions of dollars.

Intel Reportedly Survives Bid to Halt Millions in Sales to China's Huawei

The relevant information was published by the media with reference to insiders who are aware of what the mentioned company managed to cope with. By withstanding an attempt to stop shipments, Intel has been given more time to continue selling its products to the Chinese telecommunications firm, which is subject to tough sanctions imposed by Washington.

The company, based in Santa Clara, California, provides Huawei with advanced central processors that are used in laptops. The President of the United States Joe Biden demands to revoke the license granting Intel the right to carry out the mentioned activities. It is worth noting that the relevant appeals have already been declared several times. The license allowing the Santa Clara-based company to supply products to a Chinese customer was issued by the administration of the previous US President Donald Trump.

Intel found itself in the territory of increased external pressure directed towards its cooperation with a manufacturer from an Asian country, due to two sources of relevant initiatives located on different sides of the ocean. Advanced Micro Devices (AMD) has publicly begun to criticize the supply of central processing units for Huawei. This company, which is one of Intel’s main competitors, said that it was unfair that it failed to obtain a license to sell similar products to a Chinese customer. Also, the cooperation of the Santa Clara-based firm and Huawei was negatively evaluated by the so-called political hawks in China, who are convinced of the need to stop the interaction of the manufacturer from an Asian country with an American partner.

Intel’s ability to hang on to the license to sell chips indicates the ambiguity and uncertainty of the state of affairs that has formed in the space of relations between Beijing and Washington. The United States, in an effort to limit the technological potential of the Asian country, has imposed restrictions on Chinese companies’ access to advanced microcircuits. At the same time, against the background of clearly unfavorable external circumstances, including those with political reasons, Intel continues to cooperate with Huawei. It is also a very remarkable fact that the Santa Clara-based company retained the specified license, and AMD failed to obtain permission to supply similar products to the same Chinese customer.

It is worth noting that Huawei is one of the first Chinese companies to be sanctioned by the United States as part of a kind of technological confrontation between Beijing and Washington. In May 2019, the Donald Trump administration blacklisted the firm. The first claims against the company from Washington were made much earlier. Back in 2008, the US military stated about Huawei’s cooperation with the Chinese armed forces. After that, the company was limited to access to American networks transmitting information of a state and military nature.

According to media reports, cooperation with Intel has allowed Huawei to maintain a small but growing share of the global laptop market. At the same time, AMD was prevented from supplying similar products to the technology giant from China. If this company had been granted permission to carry out the relevant activities, it could have received additional income of several hundred million dollars.

Emma Xu, an analyst at Canalys, a research company that studies trends and the general state of affairs in the technology market, says that most of the CPUs that Huawei laptops are equipped with are still manufactured by Intel. Based on this circumstance, the expert concludes that any further restriction on cooperation between the two companies would significantly complicate the making of laptops by the firm from an Asian country.

Intel, Huawei, the Commerce Department, and the White House declined to comment to the media about the license, the principle of getting which remains unclear, especially against the background of deteriorating relations between Beijing and Washington. AMD also did not respond to a request from reporters.

The Chinese Embassy in the United States characterizes the restrictions on Huawei as an economic bullying. The embassy also calls on Washington to stop the practice of excessively expanding the concept of national security to suppress companies from an Asian country.

Huawei is in some ways a symbol of what could be called the technology war between the United States and China. This company has fully faced the burden of sanctions from Washington. At the same time, Huawei rejects the accusations of the American side related to cooperation with Chinese intelligence services and the army, and violations of US trade norms.

At the end of 2020, shortly before Donald Trump left the presidency, the United States Department of Commerce granted Intel and some other companies special permission to sell certain products to the specified company from an Asian country. AMD has applied to sell similar products in early 2021. The company has not received an official refusal but it has not been granted permission to supply goods to China’s technology giant. In fact, the authorities did not respond to AMD’s application, which was submitted after Joe Biden took office as President of the United States. This was reported by the media, referring to insiders.

Currently, there is no information about why AMD’s application was ignored. It is worth noting that this company still cooperates with Huawei, but the scope of the relevant activities could be much wider. According to information contained in AMD’s internal presentation with data sourced to NPD and GfK, the share of sales of laptops from the Chinese firm equipped with chips of this brand in the first half of last year was 9.3% compared with 47.1% in 2020. The corresponding share of Intel increased from 52.9% to 90.7%. In this case, it means the dynamic of the mentioned indicator from 2020 to 2023. Also in the specified presentation, it is noted that by the beginning of last year, the estimated discrepancy in Intel and AMD revenues amounted to more than $512 million.

Circana, a company founded in 2023 as a result of the merger of NPD and IRI, and GfK, which is owned by NIQ, declined to comment on the mentioned information.

The media, citing insiders, report that calls to revoke Intel’s license that provides the opportunity to supply products to Huawei probably had a certain result. These assumptions are based on the fact that a government official has publicly stated that the licensing policy related to a Chinese company is being reviewed, clarifying privately that the Commerce Department will correct the disparency. However, at the end of 2023, it became known that plans to cancel licenses had been postponed. Currently, there is no information about the reasons for this decision. It is worth noting that the implementation of the license cancellation plan may be resumed over time.

Special attention should be paid to the fact that Intel’s license will expire this year. The media, citing insiders, report a high level of probability that the company will lose the opportunity to supply products to a Chinese customer.

Huawei continues to rely on American supplier chips for its laptops. Canalys data shows that the share of this company’s products in the Chinese market of corresponding devices last year amounted to 9.7%. In 2018, this figure was fixed at 2.2%. Last year, Huawei became the third largest laptop manufacturer in China, displacing Dell in this position.

As we have reported earlier, Intel Issues Outlook for First Quarter of 2024.

Serhii Mikhailov

2107 Posts 0 Comments

Serhii’s track record of study and work spans six years at the Faculty of Philology and eight years in the media, during which he has developed a deep understanding of various aspects of the industry and honed his writing skills; his areas of expertise include fintech, payments, cryptocurrency, and financial services, and he is constantly keeping a close eye on the latest developments and innovations in these fields, as he believes that they will have a significant impact on the future direction of the economy as a whole.