Qualcomm Inc. is getting hurt by the U.S.-China trade war, just as the world’s biggest economies move to the next generation of cell-phone-network technology.


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 gave a disappointing outlook for its fourth quarter Wednesday, with much of the disappointment coming from two big issues related to China: trade and the transition to 5G in cell phones.

“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 Chief Executive Steven Mollenkopf told analysts in a conference call.

Qualcomm shares fell 5% in after-hours trading. Its stock has been on a roller coaster for the past two years, as events in its royalty-seeking litigation have driven big ups and downs in the stock. Most recently though, it resolved a nasty dispute with one of its biggest customers, Apple Inc.

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Its third-quarter revenue included $4.7 billion related to its settlement with Apple and its contract manufacturers.

Executives added that in China, device shipments from handset makers to carriers and retailers was down 5%, but said the device sell-through from carriers and retailers to consumers was more pronounced, down approximately 20% year-over-year, “reflecting in part a pause by consumers ahead of 5G and an uncertain macro environment.”

It is worth remembering that last year’s attempted $121 billion takeover of Qualcomm by Broadcom Inc.

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  was squashed by the Trump administration because of national-security risks, including worries that potential cost-cutting moves would benefit Huawei Technologies Co. and help lead to Chinese dominance in 5G. Those fears appear well-founded, as Huawei is poised to take the global lead in developing 5G technology.

Some Chinese original-equipment manufacturers, or OEMs, are now purchasing from Huawei. Qualcomm said that as a result of the trade dispute, its business is being impacted by a shift in OEM share toward Huawei, as it increases its focus on the domestic Chinese market. To a lesser extent, Qualcomm lost some direct sales to Huawei as a result of the U.S. trade ban against the Chinese tech giant.

Qualcomm said its fourth-quarter forecast did not include any revenue from Huawei. In the third quarter, Qualcomm recognized a $150 million interim payment from Huawei for licensing its technology. Qualcomm noted that Huawei’s 5G modem is at least 50% bigger than its first-generation 5G chipset.

“It’s an extremely uncertain environment in the next couple of quarters,” said Maribel Lopez, principal analyst at Lopez Research. “There are a lot of moving parts, between legal battles, tariff issues, and changes in market demand for products like smartphones.”

Lopez added that she believed the decision by some Chinese OEMs to go with Huawei’s 5G modem chipsets was likely due to fears that the trade war or Qualcomm’s legal issues would prevent it from licensing its technology, as opposed to any patriotism by Chinese companies. “If you are uncertain that you might not be able to access a technology, nationalism or no nationalism, you have to get that product in your design.”

Still, as China zooms ahead with 5G and the U.S. remains behind, Qualcomm is missing out on part of the world’s biggest market in its core competency. On top of that, it still has a remaining legal issue looming. In May, a U.S. District Court Judge in Northern California ruled that Qualcomm unlawfully suppressed competition in the smartphone market and violated antitrust law, one month after the company’s settlement agreement with Apple over similar allegations. Qualcomm told investors on the call that there was a “fairly widespread consensus that the judge’s court order is erroneous in many, many respects.” The company’s appeal has been granted an expedited review, Mollenkopf said.

Read also: Qualcomm gets tossed back into the uncertainty that the Apple settlement seemed to cure.

As one investor noted on Twitter, it seems like Qualcomm is a company that takes one step forward, and two steps back. And clouds are hanging over the stock again.

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