China deadline on NXP/Qualcomm nears - Mobile World Live

China deadline on NXP/Qualcomm nears

25 JUL 2018

The future of Qualcomm’s proposed acquisition of NXP Semiconductors remains uncertain as a deadline for Chinese regulators to approve the deal enters into the final hours.

The deal, first announced in October 2016, has been approved by eight of the nine global regulators required, with China the remaining roadblock.

The tie-up has been caught in the crosshairs of an ongoing spat between China and the US, with the technology sector a major bone of contention between the two countries.

In recent months, Qualcomm has attempted to push through the deal, while reportedly offering further concessions to appease Chinese regulators.

The US chip giant however reportedly stated in April it would call off the move completely if it did not win Chinese approval by 25 July (today), 23:59 eastern US time.

Should China fail to meet the deadline, Qualcomm will be subject to pay a $2 billion breakup fee, while the collapse is likely to further increase tensions between the US and China.

Qualcomm said it would use NXP to expand into new growth areas beyond mobile, such as automotive, security and IoT, so, aside from the breakup fee, failure to conclude a tie-up will also no doubt prove a blow for the company’s long-term strategy.

Last week, Qualcomm CEO Steve Mollenkopf did however state the company was strong enough to continue to thrive, even if the NXP deal falls through.

Stone wall
Qualcomm’s hopes that the deal would be approved by China heightened in May after ZTE reached a settlement for the US government to lift an import ban.

But, speaking to Reuters, a source close to Qualcomm said the company was facing a “stone wall” in dealing with China’s antitrust regulator.

The source did however add that it was a toss-up that the deal could yet be approved at the last minute.

Another source said that Qualcomm is preparing to pay the break-fee to NXP, with approval looking unlikely.

Aside from US trade tensions, Chinese regulators have expressed concerns about the deal’s impact to Chinese companies operating in the semiconductor market.

Reuters said China accounted for nearly two-thirds of Qualcomm’s global revenue last year.

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Kavit Majithia

Kavit joined Mobile World Live in May 2015 as Content Editor. He started his journalism career at the Press Association before joining Euromoney’s graduate scheme in April 2010. Read More >>

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