Restrictive US policies limiting 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 about Qualcomm’s business in the country, its largest market by revenue.
“If you have a leading technology, you're going to have a big business in China,” he said.
The San Diego-based firm finds itself in a difficult situation, as the White House and Congress ramp up a pressure campaign to curb the sale of US chips and chipmaking tools to China, citing national security concerns. The Biden administration has argued that China’s access to advanced semiconductors could aid military advancements.
Meanwhile, in China, government agencies and state-owned firms have widened their ban on Apple’s (AAPL) iPhones for employees. Qualcomm is one of Apple’s biggest suppliers.
China remains the largest semiconductor market in the world, with sales in the country accounting for one-third of the global market, according to the Semiconductor Industry Association (SIA). With combined annual sales of $50 billion for Nvidia (NVDA), Intel (INTC), and Qualcomm, the country remains a major revenue driver for American chipmakers.
Additional curbs are likely to pose the biggest threat to Qualcomm, which has the largest exposure to the market, with the country accounting for roughly 60% of overall revenue. The firm supplies chips to major Chinese handset makers, including Oppo, Vivo, Xiaomi, and Huawei.
“So far, many of the policies have not yet restricted the ability to continue to do business in phones, in PCs, and cars, and we want that to continue,” Amon said. “While we cannot predict the future, I think stronger relationships between Chinese enterprises [and] American enterprises always serve as a stabilizing factor in the [bilateral] relationship.”
The Chinese market has helped drive the recovery for Qualcomm, as it looks to bounce back from years of sluggish smartphone sales. Amon said the firm saw an estimated 35% jump in sales to Chinese smartphone makers during the company's fourth quarter earnings call.
He added that the company remains focused on diversifying its offerings in China, instead of diversifying away from the region. Under his tenure, Qualcomm has made an aggressive push into the automotive space, with its Snapdragon Digital Chassis platform, designed for vehicles that are increasingly defined by software.
Major Chinese automakers, including BYD, Nio, and Li Auto, have integrated Qualcomm chips into their vehicles.
“We want to create growth vectors for the company,” he said. “Mobile is a great market. Every time you have an upgrade, you're going to have growth, but it's a fully penetrated market.”
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Akiko Fujita is an anchor and reporter for Yahoo Finance. Follow her on Twitter @AkikoFujita.
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