PALO ALTO, U.S. -- The U.S. export ban on Huawei Technologies is costing Qualcomm customers in China and will create "great headwinds" going forward as the industry shifts to 5G, the U.S. chipmaker said as it announced earnings for the quarter through June.
"The Huawei export ban, along with the pivot from 4G to 5G, which accelerated over the past couple of months, has contributed to industry conditions, particularly in China, that we expect will create great headwinds in our next two fiscal quarters," Qualcomm CEO Steven Mollenkopf said in Wednesday's earnings call.
While Huawei has been a key customer of Qualcomm, buying chips from the world's biggest mobile chip developer, the Chinese company also develops its own mobile processors in-house for its smartphone product lineups.
Qualcomm and Huawei's chip unit HiSilicon Technologies, meanwhile, have competed with each other to roll out new 5G mobile solutions for next-generation handsets that would allow speedy, low-latency data transfers to enable high-quality livestream, new AI features, 3D sensing and more.
The U.S. export ban has forced Huawei to adopt more of its own in-house solutions, and, according to Mollenkopf, is encouraging the Chinese company to focus more on its home market.
"Huawei is driving customers away from us as they are becoming increasingly focused on the domestic market because of the U.S. export ban," Mollenkopf said. However he characterized this as "a little bit of share loss at the low tier" and not "financially impactful."
Including the more than $4 billion from settlement agreements with Apple and its contract manufacturers, Qualcomm's revenue and net income for April-June were both up over 70% on the year. With that amount stripped out, revenue fell 13% on the year to $4.9 billion, while net income fell 34% to $1 billion.
For the three months through September, Qualcomm expects adjusted revenue of between $4.3 billion and $5.1 billion, a year-on-year decrease of 12-16%.
Mollenkopf also discussed China's progress in rolling out commercial 5G mobile services, and said the trend in the country will be toward lower priced services.
"In China, 5G commercial service was officially approved in early June, and our current estimate is that by the end of this year, the three China operators will deploy roughly 100,000 5G base stations, which to put in context is the equivalent of the scale of the entire network of a large U.S. wireless operator," he said.
On Tuesday, Qualcomm announced a mobile gaming tie-up with Chinese tech company Tencent Holdings. One of the world's biggest game companies, Tencent has been struggling with China's pause on issuing licenses for new titles.
Meanwhile, Intel CEO Bob Swan said in an interview with CNBC on Wednesday that the PC chip king has applied for licenses to sell "general purpose products" that the executive believes cause no national security concerns. Swan said his company did sell some products to Huawei in the past June quarter after determining what products were with in the rule of the law.
Nikkei staff writers Yifan Yu in Palo Alto and Cheng Ting-Fang in Taipei contributed to this article.