Qualcomm says NXP deal is dead

Marco Green
December 4, 2018

The American chip manufacturer Qualcomm no longer sees any salvation in an acquisition of its Eindhoven-based industry partner NXP. In the past the European Union and Federal Trade Commission of the United States had opposed large corporate mergers for monopoly reasons, however, the Chinese government didn't publicly say they opposed the deal or give any insight into the matter, they just did not approve it by the original deadline, which was essentially the same thing.

"If that deal came back to him, he would most likely approve it quickly", Trump said.

The statement about revisiting Qualcomm-NXP was included in the White House release, but not the one from the China side.

White House economic adviser Larry Kudlow said on Monday that President Donald Trump put the issue of US chipmaker Qualcomm Inc's now abandoned acquisition of Dutch peer NXP Semiconductors NV on the table for talks with Chinese President Xi Jinping.

Qualcomm has already paid a $2 billion break-up fee to NXP.

Qualcomm, the world's biggest smartphone-chip maker, walked away from its agreement to buy NXP in July, after failing to secure Chinese regulatory approval.

In July, Qualcomm, which is based in California, confirmed that the company is terminating its proposed takeover of its rival NXP which is based in The Netherlands. The company will instead focus on making its 5G transition.

Had it have gone through, it would have been the biggest semiconductor deal globally and its collapse helped exacerbate growing trade tensions between the USA and China.

The Trump administration slapped tariffs on $200 billion of Chinese imports in a move aimed at reducing the trade deficit. It is important to note that China initially withholds the approval of the merger between the two chipmakers.

Stacy Rasgon, an analyst with Bernstein Research, said in a research report that it would be risky to attempt a repeat of the NXP deal.

One major victim of the U.S. -China trade tensions will last. The perception was that Broadcom is more concerned with acquisitions than R&D, and any let up could allow Huawei to leapfrog Qualcomm, and thereby the U.S., in 5G.

Other reports by Click Lancashire

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