Intel Corp has been granted licences from US authorities to continue supplying certain products to Huawei Technologies, even as US-China relations are at their worst in decades, Reuters reported citing an Intel spokesman.
Intel (INTC) received the US government’s approval after new restrictions effective from Sept. 15 have barred US companies from supplying or servicing Huawei.
In addition, the Trump administration has been asking governments around to world to join the action to squeeze out Huawei, according to the report. The US is fearing that the telecoms giant would provide data to the Chinese government for espionage. In addition, the US is concerned that 5G dominance would give China an advantage Washington may not be ready to cope with.
This news was first published this week by state-backed China Securities Journal, which said Intel had received permission to supply Huawei.
Last week China’s Semiconductor Manufacturing International Corporation confirmed it had also sought permission to continue servicing Huawei, according to Reuters. SMIC uses US-origin equipment to make chips for Huawei and other companies.
South Korean chipmaker SK Hynix also asked for US licence for Huawei sales, but it has not gained approval, Reuters said.
With US restrictions in place, non-U.S. firms are unlikely to receive US approval, and as a result, chipmakers are working on contingency plans to divert supplies to other customers.
In August, Taiwanese chip designer MediaTek Inc disclosed it had applied to the US government for permission to continue supplying China’s Huawei.
Meanwhile, Huawei has rebuffed all claims that it spies for Beijing and alleges that the US is trying to smear it because Western companies are falling behind in 5G technology.
Shares in California-based Intel, which is one of the few remaining in the world that both designs and manufactures its own chips, have dropped 17% this year. Meanwhile, the $57.32 average analyst price target implies about 15% upside potential in the next 12 months.
Northland Securities analyst Gus Richard earlier this month reiterated a Sell rating on the stock with a $48 price target, due to stiff competition.
“In the near term, we are not optimistic about INTCs prospects given the loss of Huawei and Apple notebook as well as AMD market share gains,” Richard wrote in a note to investors. “We believe INTC will lose market share until it shifts production to TSMC. For this reason, over the next 18 to 24 months AMD will likely continue to gain share at a rate of 1% to 2% a quarter.”
Looking ahead though, Richard noted that “if INTC shifts manufacturing to TSMC the playing field will level out, and share shift will likely slow”.
Overall, the rest of the Street is sidelined on the stock. The Hold analyst consensus breaks down into 14 Holds and 9 Sells versus 9 Buys. (See Intel stock analysis on TipRanks).
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