Gary Lerude, MWJ Technical Editor
Gary Lerude, MWJ Technical Editor RSS FeedRSS

Gary Lerude

Gary Lerude is the Technical Editor of Microwave Journal. Previously, he spent his career as a “midwife” aiding the growth of the compound semiconductor industry, from device to application, from defense to commercial. He spent 19 years at Texas Instruments, 11 years at MACOM and six years with TriQuint. Gary holds a bachelor’s in EE, a master’s in systems engineering and an engineers degree (ABD) in EE.

Cellular 4G/LTE Channel / Industry News / 6G/5G/Massive MIMO Channel / RFIC Channel

Huawei Export Ban Hits Qorvo: $50M Revenue Drop This Quarter

May 21, 2019

Today, Qorvo updated its financial guidance for the current quarter (Q1 of fiscal 2020) to reflect the impact of lost revenue from Huawei. The U.S. Department of Commerce has banned exports to Huawei, adding the company and 68 affiliates to the Entity List effective May 16. The action impacts all Qorvo products sold to Huawei, which are used in mobile phones and infrastructure equipment.

For Qorvo’s most recent fiscal year, which ended March 30, 2019, the company said revenue from Huawei was approximately $469 million or 15 percent of total revenue. For Q1, Qorvo updated the prior guidance, which reflects a $50 million revenue hit in Q1 (midpoint to midpoint):

Qorvo Q1 FY20 updated guidance

Qorvo said it has ceased shipments to Huawei and its affiliates and cannot predict when shipments will resume.

The Department of Commerce ruling requires any item subject to the Export Administration Regulations (EAR) to have an export license, advising that applicants should presume any license applications will be denied.

However, recognizing the severity of the action, the Department of Commerce said yesterday (May 20) it will provide limited exceptions to the ban through a Temporary General License (TGL). Explaining the move, Secretary of Commerce Wilbur Ross said,

“The Temporary General License grants operators time to make other arrangements and the Department space to determine the appropriate long-term measures for Americans and foreign telecommunications providers that currently rely on Huawei equipment for critical services. In short, this license will allow operations to continue for existing Huawei mobile phone users and rural broadband networks.”

What that means is not totally clear, although it has been described as allowing shipments to maintain existing products, not to support new product development or new sales.

Companies or individuals are added to the Entity List when the Department of Commerce determines the named entity “has been involved, is involved, or poses a significant risk of being or becoming involved in activities that are contrary to the national security or foreign policy interests of the United States.”

ZTE was named to the Entity List and suffered a similar export ban last year, essentially shutting down all operations for several months. ZTE had admitted to violating U.S. export laws by shipping products to Iran and North Korea, then not carrying out the settlement it had agreed to with the U.S. government. President Trump lifted the ban after ZTE paid a $1.3 billion fine and replaced its senior management team and board of directors.

Like ZTE, Huawei has been accused of violating U.S. export laws by selling products to Iran through shell companies. Accused by the U.S. of being involved in these illegal exports, the company’s CFO and daughter of the founder, Meng Wanzhou, was arrested in Canada and is awaiting extradition to the U.S.

Separately, Huawei has been accused of being a national security threat, potentially enabling data traveling through its networking gear to be siphoned to China. Allowing Huawei to supply infrastructure equipment for 5G networks is seen as particularly troublesome by U.S. intelligence officials. With mixed success, the U.S. has been lobbying other countries not to use Huawei equipment.

Given the strategic importance of Huawei to China, with Huawei a major customer for many U.S. tech companies, I expect this export ban to quickly reach a boil. Will Huawei admit to violating U.S. export laws to reach a settlement? Or will the perceived 5G threat motivate the U.S. to keep Huawei locked up?

Post a comment to this article