Qualcomm’s proposed acquisition of NXP Semiconductors reportedly hit a snag in China, as regulators push for more protections for local companies before approving the deal.
Bloomberg reported China’s Ministry of Commerce wants Qualcomm to propose more remedies to satisfy competition concerns, with Chinese companies arguing the deal will be harmful and should be blocked.
Sources told Bloomberg Chinese companies are particularly concerned a combined Qualcomm and NXP entity would extend the former’s patent licensing business into areas including mobile payments and autonomous driving system components.
Indeed, when striking the deal, Qualcomm positioned it as a move beyond its core mobile chip business, highlighting the automotive sector as a potential opportunity.
China is today the world’s biggest importer of semiconductors and is seeking to build expertise within the country to reduce the country’s reliance on overseas technology, Bloomberg stated. China’s government is reportedly raising more than $30 billion to invest in local chip companies.
The deal for NXP is, however, also crucial for Qualcomm, particularly in the context of an attempted acquisition by Broadcom. An NXP tie-up could be key for Qualcomm to remain a standalone entity and fend off future takeover advances.
Closing the NXP acquisition has notably proved far from straight forward.
NXP investors pushed Qualcomm to raise its agreed offer of $110 per share, arguing the original bid undervalued the company. Qualcomm eventually agreed, raising its offer to $127.50 per share and, in turn, securing the support of shareholders, including major investor Elliot Management.