According to two individuals with knowledge of the situation, Intel has withstood an attempt to block chip sales to Huawei worth hundreds of millions of dollars, giving one of the biggest chip companies in the world more time to sell to the Chinese telecom giant that is subject to strict sanctions.
US President Joe Biden has been under constant pressure to rescind a license that the Trump administration granted Intel to supply cutting-edge central processors to Huawei so that they can be used in laptops.
The push came from China hawks, who want to halt any sales to the Chinese company, and Advanced Micro Devices, an Intel rival, claiming it was unfair that they were denied a license to sell Huawei compatible chips.
The fact that Intel was able to maintain its chip sales license while a competitor was unable to do the same shows how unstable the business environment is for companies trying to restrict Beijing's access to advanced American technology, particularly for a heavily sanctioned firm like Huawei.
It has also enabled Huawei to maintain a small but expanding portion of the worldwide laptop market, while data indicated AMD lost out on hundreds of millions of dollars in sales to the Chinese-sanctioned company.
Due to suspected sanctions violations, Huawei — a symbol of Washington and Beijing's protracted technological war — was added to the list of companies subject to trade restrictions by the Trump administration in 2019. In the past, Huawei has denied any wrongdoing.
American suppliers are often prohibited from doing business with the targeted company after being placed on that list.
However, the Commerce Department gave select American Huawei suppliers, including Intel, special approval to sell specific goods to the massive telecom equipment company in late 2020, shortly before former President Donald Trump left office.
After President Joe Biden assumed office in early 2021, AMD asked for a license to sell comparable processors, but it never heard back.
It was unclear why AMD was denied a license while Intel was granted one. According to an in-house AMD presentation using data from GfK and NPD, the impact on sales of CPU chips to Huawei was immediate, with the percentage of Huawei laptop sales with AMD chips falling to 9.3% in the first half of 2023 from 47.1% in 2020.
The presentation showed that during the period, Intel's proportion of sales of Huawei laptops using its CPUs increased dramatically from 52.9% to 90.7%.
That resulted in an estimated revenue discrepancy between the two companies of up to $512 million by the beginning of 2023, based on the presentation.
The effort to withdraw licenses seemed likely to succeed last year when, according to sources, a government official promised businesses in private that the Commerce Department would resolve the licensing discrepancy while publicly declaring that Huawei's licensing policy was being reviewed.
A US official said that by late last year, the agency had abandoned its plans to cancel licenses without giving a reason, but he also stressed that the plan might be resurrected at a later time.
The reason for the Commerce Department abandoning its intentions to cancel Intel's license was unknown. However, the action coincided with Washington's efforts to mend fences with Beijing, including the resumption of military-to-military discussions after the discovery of a Chinese spy balloon in American airspace last winter, which damaged ties between the two countries.
According to sources, Intel's license is likely not going to be extended when it expires later this year. Yet, as can be seen from its website, Huawei still mainly relies on Intel CPUs for its laptops.
As of 2023, Huawei has surpassed Dell to become China's third-largest laptop manufacturer, with a sales share of 9.7%, up from 2.2% in 2018.
Not just Intel benefits from the unequal licensing policy. Another source claimed that at the end of the Trump administration, Qualcomm secured a license to sell chips that power Huawei cellphones, but Mediatek, a competitor Taiwanese company, had its application rejected, which caused its sales of Huawei handsets to plummet.
However, since Huawei announced the release of new 5G cellphones using its own chips, Qualcomm stated in a recent filing that it does not anticipate receiving significant product revenues from Huawei in the future.