China awaits assurances to clear NXP deal

China was ready to approve Qualcomm’s $43bn takeover of NXP Semiconductors if it got assurances that the US would lift a seven-year ban on homegrown telecoms giant ZTE, people familiar with the matter said.

The antitrust regulator had cleared all factual investigations, was satisfied with the remedies Qualcomm was offering and only procedural issues remained, said the people, who requested not to be identified discussing internal matters.

Senior officials have given a green light for approval of a deal that has been pending for 18 months, with an announcement possible any time, they said.

China’s review of Qualcomm’s largest acquisition has languished amid an escalating trade fight between the world’s two largest economies, fuelling concern that the NXP deal might become a bargaining chip.

At the same time, Beijing wants ZTE freed up to buy the US chips and components it needs to make networking equipment and smartphones.

That had prompted Beijing to link its review with the resolution of that moratorium, the people said. It was said to have restarted recently, spurring hope that the acquisition would finally go through.

Calls to China’s State Administration for Market Regulation, the watchdog overseeing the deal, went unanswered.

Qualcomm did not immediately respond to e-mailed requests for comment, while NXP representatives did not respond to e-mails and phone calls seeking comment.

The Wall Street Journal reported at the weekend that regulators were set to approve the deal.

Since the transaction was first announced on October 2016, the bid has been sweetened, got caught up in Broadcom’s failed hostile bid for Qualcomm, then got dragged into the trade dispute. Local companies had also expressed concern that the combined entity would extend Qualcomm’s patent licensing business into areas such as mobile payments and autonomous driving.

Completing the NXP transaction, however, is a top priority for Qualcomm, after its defence against Broadcom forced management to extend commitments on future business expansion and earnings.

San Diego-based Qualcomm is seeking to reduce its dependence on a slowing smartphone market, while competitors and customers fight to overturn its dominance.

Responsibility for antitrust matters in China has been transferred to the State Administration for Market Regulation from the commerce ministry.

China has a say in the merger and acquisition transaction because it is the world’s largest importer of semiconductors, though it is seeking to reduce its dependence on foreign technology and build its own industry.

SENIOR OFFICIALS HAVE GIVEN A GREEN LIGHT FOR APPROVAL OF A DEAL THAT HAS BEEN PENDING FOR 18 MONTHS