China may scupper Qualcomm NXP deal
QUALCOMM is yet to win China’s nod to buy Dutch chipmaker NXP Semiconductors, even as a deadline for the offer to expire is only hours away, raising the prospect the deal could be scuppered amid Sino-US trade tensions.
The $44 billion (R588.44bn) deal was announced in October 2016, just days before the election of US President Donald Trump, and has since become embroiled in a whipsawing trade stand-off between two countries that are at loggerheads over trade tariffs and have clashed on issues such as ownership of technology and patents.
Qualcomm, the world’s biggest maker of chips for mobile phones, and NXP said in April they would call off the deal if they were unable to win Chinese regulatory approval by July 25, 11.59pm eastern US time. China was the only hold out from eight of the nine global regulators required to approve the deal.
Tensions If the deal collapses, it is likely to aggravate tensions between Washington and Beijing, as the two sides look to avoid tensions spiralling into a full-blown trade war.
It will leave Qualcomm on the hook for a $2bn break-up fee and searching for new ways to expand beyond chips for the mobile phone market, where growth has slowed.
A source close to the company said it was coming up against a “stone wall” in dealings with China’s anti-trust regulator, the State Administration for Market Regulation, and that there had been no recent progress with them on the deal.
But the source added that it was still a toss-up whether the deal would be approved at the last minute.
A second source close to Qualcomm said it looks unlikely that approval from China would come yesterday and the company is making preparations to pay NXP the fee.
Qualcomm did not respond to requests for comment outside regular US business hours. The regulator could not be reached for comment.
China’s foreign ministry, responding to a question, said yesterday that relevant departments were reviewing the deal and had maintained “good communication” with Qualcomm throughout the review process.
Qualcomm needs Chinese approval, because the country accounted for nearly twothirds of its global revenue last year. – Reuters JAPAN IRELAND