China uses Qualcomm-NXP deal as a bargaining chip
beijing — China is ready to approve Qualcomm’s $43 billion takeover of NXP Semiconductors NV if it gets assurances that the US will lift a seven-year ban on homegrown telecoms giant ZTE Corp, people familiar with the matter said.
The antitrust regulator has cleared all factual investigations, is satisfied with the remedies Qualcomm’s offering and only procedural issues remain, said the people, who asked not to be identified discussing internal matters. Senior officials have given a green light for approval of a deal that’s been pending for 18 months, with an announcement possible any time, they said.
China’s review of Qualcomm’s largest-ever 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 gear and smartphones.
That’s prompted Beijing to link its review with the resolution of that moratorium, the people familiar with the matter said. It was said to have restarted recently, spurring hopes the acquisition would finally go through.
The Wall Street Journal reported on the weekend that regulators were set to approve the deal.
Since the transaction was first announced October 2016, the bid’s 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 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’s 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 Ministry of Commerce. China has a say in the M&A transaction because it’s the world’s largest importer of semiconductors, though it’s seeking to reduce its dependence on foreign technology and build its own industry.