Qualcomm could win European Union (EU) approval for its proposed acquisition of NXP Semiconductors at the end of this year, after reportedly achieving a breakthrough with regulators on patent licensing issues.
According to Bloomberg sources, the EU’s concerns have been allayed after Qualcomm said it would not acquire standard-essential and system level patents owned by NXP.
Specifically, Qualcomm pledged to maintain current licensing terms for NXP’s Mifare technology, used in swipe cards for the London Underground transport system, as well as committing to ensure NXP chips remain interoperable.
The European Commission opened a probe into the deal, first announced in October 2016 for a value at the time of $47 billion, after expressing concerns a Qualcomm-NXP tie-up could lead to higher prices and reduced innovation in the semiconductor industry.
Qualcomm in October offered concessions to push the deal through, but both NXP and Qualcomm have since warned completing the deal could push to 2018 due to regulatory scrutiny.
NXP CEO Richard Clemmer added in the company’s Q3 earnings announcement it was “working diligently” with Qualcomm and various regulators to close by the end of this year, but the timelines were tight.
Relief for Qualcomm
However, this latest development, and indeed winning EU approval, would be a big boost for the proposed merger.
EU clearance would also be significant for Qualcomm in its bid to fend off takeover advances from Broadcom, after rebuffing a $130 billion offer earlier this month.
Bloomberg Intelligence analyst Anand Srinivasan said getting the green light from the EU would be a huge relief for Qualcomm, as adding an automotive chip business in the form of NXP gives “it a much bigger and more diverse empire to oversee”.
In particular, he believes this could convince investors Qualcomm has the right strategy in place to avoid succumbing to Broadcom’s advances.
Qualcomm CEO Steve Mollenkopf said earlier this month achieving approval from Chinese antitrust authorities was another big hurdle facing the deal.
EU regulators pushed the pause button on reviewing the deal in August, as it requested more information from both companies. However, Bloomberg added the probe could be restarted as soon as today (17 November).