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The Qualcomm Sell-Down Is Overdone

Paul Farrell

Following the U.S. Commerce Department’s addition of Huawei and its affiliates to its Entity List—which prohibits the sale of certain U.S.-origin technologies to Huawei without a license—Qualcomm’s shares have sold off. While the Huawei uncertainty could impact the timing of QTL [Qualcomm Technology Licensing] negotiations, we believe there is minimal impact to QCT [actual chipsets, used in phones, for example]. In fact, we believe that Huawei is a minor customer for QCT, and we believe that Huawei’s losing share in the handset market is a net positive for Qualcomm, as that share loss is likely to be borne by handset original equipment manufacturers, or OEMs, that are paying full royalties to Qualcomm.