Daily Management Review

Qualcomm Drops $44 Billion NXP Acquisition Being Unable To Get Chinses Approval On Time


07/26/2018




Qualcomm Drops $44 Billion NXP Acquisition Being Unable To Get Chinses Approval On Time
After being unable to get approval for the acquisition of NXP Semiconductors and becoming an example of a victim of the trade spat between the United States and China, US firm Qualcomm Inc was forced to cancel the $44 billion deal.
 
The scrapping of the deal that would have marked the largest semiconductor takeover globally, was announced separately by the two companies on Thursday.
 
This deal cancellation is likely to further escalate the trade tensions between the US and China and tarnish the image of China as an antitrust regulator. It would also discourage which would require getting regulatory approval from China.
 
On Wednesday, Qualcomm had said that the race to the deal would be dropped by it unless a last minute approvals was made by China. And despite the expiry of the deadline for the deal, there was no communication form the Chinese anti-trust authority - State Administration for Market Regulation (SAMR).
 
“We obviously got caught up in something that was above us,” Qualcomm Chief Executive Steve Mollenkopf said in an interview after the announcement on Wednesday.
 
The announcement of the deal was made in October 2016 – a few days before Donald Trump was elected as the new President of the US. The deal only had the hurdle of getting Chinese approval even as the trade clash between the US and China started and later escalated even on issues related to ownership of technology and patents.
 
Some role was played in the Qualcomm deal by the Trump administration and it was being anticipated that the deal would get a clearance from China after the lifting of the ban on U.S. chipmakers preventing doing business with China’s ZTE Corp.
 
Approval from China was necessary for the deal to go through because almost two-thirds of its revenue last year for Qualcomm was generated there.
 
There has been no comments from China on the approval o eth deal.
 
“According to my understanding, the case was an anti-monopoly issue, and not related to China-U.S. trade friction,” ministry spokesman Gao Feng told a regular news conference.
 
On Wednesday, Qualcomm had said that it anticipates that Apple Inc to replace its modems with those from a rival – most probably Intel Corp, because of a fight between the two companies related to pricing and licensing costs.
 
The company however said that there had been some progress in one of two major patent royalty issues which is believed to be with the Chinese phonemaker Huawei Technologies Co Ltd.
 
There was no from Apple and a Huawei spokesman said that the company would make no comments on speculated news by the media.
 
“We think moving on, reducing the amount of uncertainty in the business and increasing the focus is the right thing to do with the company,” Mollenkopf said.
 
(Source:www.bloomberg.com)






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