Intel shares drop after US blocks chip sales to Huawei

Intel, a major player in the chip industry, suffered a material drop in its stock price on Wednesday as its operations faced a significant setback due to renewed US sanctions on one of Intel's customers in China.

Intel shares experienced a drop of 2.22 per cent on Wednesday, reflecting investor worries about the implications of the latest sanction on its revenues, reports Xinhua.

In a filing to the US Securities and Exchange Commission on Wednesday, the chip giant said it had received a notification from the US Department of Commerce that the regulator was "revoking certain licenses for exports of consumer-related items to a customer in China, effective immediately."

The company addressed these concerns by stating that, due to the directive from the US Department of Commerce, it expects its current quarter revenue to fall into the original range of 12.5 billion dollars to 13.5 billion dollars, "but below the midpoint."

Intel said its full-year revenue and earnings in 2024 would continue to see year-on-year growth.

This development has raised concerns about the potential impact on the company's revenues. The immediate impact of the license loss is evident in the market, with Intel shares dropping to 30.00 dollars upon closing on Wednesday.

Intel was the biggest decliner among members of the Dow Jones Industrial Average for the day.

The Biden administration revoked export licenses that allowed both Intel and Qualcomm to supply chips to Chinese telecom-equipment maker Huawei, a significant player in the global telecommunications market, according to a report by Financial Times on Wednesday.

Bernstein analyst Stacy Rasgon reiterated his "market-perform" rating and the 35 dollars target on Intel's stock, and his "outperform" rating and 220 dollars target on Qualcomm's stock. "Overall, we conclude that the first-order impact of further Huawei sanctions seems manageable," Rasgon said.

Intel's stock has faced a significant decline, tumbling 40.5 per cent a year to date, while Qualcomm shares have rallied, showing a 24.4 per cent increase in the same period. Comparatively, the PHLX Semiconductor Index has advanced 14.2 per cent so far this year, and the broader market, represented by the S&P 500 index, has gained 8.7 per cent.