Qualcomm slumps on Huawei ban as the tech Cold War with China heats up (QCOM)

Reuters

Qualcomm plunged nearly 5% early Monday after telling its employees it would no longer supply the Chinese telecom firm Huawei.
The Trump administration issued an executive order last week that effectively bans US firms from supplying equipment to Huawei.
The move escalates the tech Cold War with China as trade tensions continue.
Watch Qualcomm trade live.

The chipmaker Qualcomm tumbled almost 5% early Monday after the company told its employees it would not supply the Chinese telecom Huawei until further notice, as reported by Bloomberg. An emerging tech Cold War comes on the heels of continued difficulties in securing a trade agreement between the US and China.

Qualcomm’s decision comes after the Trump administration last week issued an executive order that lays the groundwork on a ban of US firms supplying Huawei, which has been accused of aiding espionage efforts of the Chinese government. The Bloomberg report also cites Intel, Xilinx, and Broadcom as other US tech companies that are taking steps to cut off equipment deliveries to Huawei.

On Sunday, sources told Reuters that Google suspended its business with Huawei and dropped its licensing on Android.

The Department of Justice previously charged Huawei with attempting to steal technology from the US telecom T-Mobile, and also violating US sanctions by conducting business with Iran. The Justice Department has charged Huawei executives, including its CFO, with bank fraud and money laundering in connection with the company’s Iran business dealings.

An absence of equipment from US telecoms suppliers will have wide-ranging effects on Huawei should the ban stay in effect. Analysts at the risk consultancy Eurasia Group noted that without US suppliers, Huawei would be unable to conduct even routine maintenance and hardware replacement.

In addition, the ban would severely set back China’s efforts to secure a leading role in the emerging 5G network technology, widely expected to be critical to future economic growth. 5G is expected to make significant leaps in delivering high-speed data, with some estimates placing the next generation technology as three times faster than 4G.

Qualcomm recently settled a patent dispute with Apple, paving the way for both firms to move forward on development of 5G technology. The settlement awarded Qualcomm nearly $5 billion.

Qualcomm was up 37% through Friday’s closing bell.

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