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Tough US policies restricting advanced chip exports to China have done little to dampen Qualcomm’s (QCOM) enthusiasm for the world’s second-largest economy.
In an interview at CES 2024 in Las Vegas, CEO Cristiano Amon expressed confidence in Qualcomm’s business in the country, the company’s largest market by revenue.
“If you have cutting-edge technology, you can do big business in China,” he says.
The San Diego-based company is in trouble as the White House and Congress step up a pressure campaign to curb sales of U.S. chips and semiconductor manufacturing tools to China, citing national security concerns. I’m depressed. The Biden administration has argued that China’s access to advanced semiconductors could help military progress.
Meanwhile, in China, government agencies and state-owned companies are expanding bans on Apple’s (AAPL) iPhones for employees. Qualcomm is one of Apple’s largest suppliers.
China remains the world’s largest semiconductor market, with sales accounting for one-third of the global market, according to the Semiconductor Industry Association (SIA). The country remains a major revenue driver for American chipmakers, with Nvidia (NVDA), Intel (INTC), and Qualcomm having combined annual sales of $50 billion.
Additional regulations are likely to pose the biggest threat to Qualcomm, which has the largest market exposure and accounts for about 60% of the country’s sales. The company supplies chips to major Chinese mobile phone manufacturers such as Oppo, Vivo, Xiaomi, and Huawei.
“So far, many of the policies have not restricted business continuity on phones, PCs and cars. We want to continue doing that,” Ammon said. “I can’t predict the future, but I think the relationships between Chinese companies will become even stronger.” [and] American companies will always act as a stabilizing factor in the world. [bilateral] relationship. “
Qualcomm is trying to recover from years of sluggish smartphone sales, and the Chinese market is driving the recovery. Amon said on the company’s fourth-quarter earnings call that sales to Chinese smartphone makers rose an estimated 35%.
He added that the company remains focused on diversifying its services in China, rather than diversifying away from the China region. During his tenure, Qualcomm has aggressively moved into the automotive space with his Snapdragon Digital Chassis platform, designed for vehicles that are increasingly defined by software.
Major Chinese automakers such as BYD, Nio, and Li Auto are incorporating Qualcomm chips in their vehicles.
“We want to create a growth vector for the company,” he said. “Mobile is a great market. We see growth with every upgrade, but the market is fully penetrated.”
Read more detailed coverage CES 2024:
Akiko Fujita is an anchor and reporter for Yahoo Finance. Follow her on Twitter @Akiko Fujita.
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