The Qualcomm Inc (NASDAQ: QCOM) stock price rose 5.62% after announcing that it had signed a three-year agreement with Apple Inc. to supply Snapdragon® 5G Modem‑RF Systems for smartphone launches in 2024, 2025 and 2026.
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Investors cheered the news that cements Qualcomm’s position as a leading Apple Inc. supplier ahead of Apple’s big event scheduled for September 12, 2023. The announcement comes just a few days after Qualcomm stock plunged lower on the Chinese iPhone bans.
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Last Thursday, the Chinese government extended its iPhone ban to include government-backed agencies and state companies. China, including Hong Kong, accounts for roughly two-thirds of Qualcomm’s revenue. Therefore, the Chinese market is highly crucial for the company.
Investors will keep a close eye on the developments in China as the United States considers a broader ban on Huawei, the Chinese company that kickstarted the trade war between the two countries in 2018-2020 under former President Donald Trump.
Qualcomm currently sells older generation 4G chips to Huawei, and a ban on these sales will drastically impact the company’s revenues. On the other hand, Qualcomm sells its 5G Snapdragon chips to Apple, and a decline in iPhone sales could also affect the company’s top and bottom lines.
The recent controversy around the supply of Chips to Huawei by China’s top chipmaker, Semiconductor Manufacturing International Corp. (SMIC), appears to have violated US sanctions by supplying advanced components to the blacklisted company, US lawmakers said.
A complete disassembly of Huawei’s latest smartphone commissioned by Bloomberg revealed that it was using an advanced 7-nanometer processor built by SMIC to power its latest smartphone, indicating that the company might have broken US sanctions by supplying Huawei.
US rules require companies seeking to supply Chinese firms with technology to apply for a license to sell the technology. However, initial reports indicated that the company might not have such a license, meaning it might have violated US sanctions.
Representative Michael McCaul, the Republican chairman of the House Foreign Affairs Committee, has been vocal in protesting against what he considers insufficient enforcement of the Entity List, which should be enforced by the Department of Commerce’s Bureau of Industry and Security.
Qualcomm (QCOM) share
The Qualcomm (QCOM) stock price rose 5.62% to $112.11 from Friday’s closing price of $106.14.
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