China restarts review of Qualcomm’s US$44b NXP purchase
The deal’s approval by mainland authorities would mark another step back from a trade war that had threatened to engulf China and the US
Chinese regulators have restarted their review of Qualcomm’s application to acquire NXP Semiconductors after having shelved the work earlier in reaction to growing trade tensions with the United States, according to people familiar with the matter.
Officials of China’s Ministry of Commerce (Mofcom) have been asked to hasten the long-delayed review of the purchase and Qualcomm’s proposed remedies to protect companies on the mainland, said the people, asking not to be identified because the talks are private.
Chinese companies have expressed concern that the combined entity would extend Qualcomm’s patent licensing business into areas like mobile payments and autonomous driving.
The approval, if it comes, would mark another step back from a trade war that had threatened to engulf the world’s two largest economies.
On Sunday, US President Donald Trump stepped in to rescue ZTE Corp, the Chinese telecommunications equipment maker that had been in danger of failing because of a ban on buying US components. In a Twitter post, Trump said he was working with Chinese president Xi Jinping to give ZTE “a way to get back into business, fast”.
Qualcomm approval is not definite at this point and could still be delayed, the people said.
Nasdaq-listed Qualcomm declined to comment.
Mofcom responded to a faxed request for comment by directing inquiries to the State Administration for Market Regulation, which from Monday had taken over at least some antitrust oversight from the ministry. Calls to that agency’s news office, however, went unanswered.
After the US announced its ZTE penalties, Chinese authorities rallied to its defence. Mofcom responded by saying it was “ready to take necessary steps” to protect domestic companies.
China, which has a say in the proposed takeover because it is the world’s largest importer of semiconductors, is seeking to reduce its dependence on foreign technology and build its own industry. The country’s chip companies have rallied with anticipation that Beijing may increase its support for domestic competitors.
Chinese semiconductor-related stocks fell after reports of the restart of the regulatory review. Ningbo Kangqiang Electronics fell as much as 7 per cent, Changsha Jingjia Microelectronics dropped as much as 3.3 per cent and Ninestar Corp slid 2.6 per cent.
The NXP transaction is crucial for Qualcomm after it fought off a hostile takeover bid by Broadcom that forced its management to give commitments for future business expansion and earnings that it will now have to deliver. Qualcomm aims to lessen its dependence on a smartphone market that is slowing and where competitors and customers are increasingly fighting to overturn its dominance.
Qualcomm’s largest-ever transaction was announced more than a year ago and the San Diego, California-based chip maker had told investors it would be closed by the end of last year.
In January this year, Qualcomm raised its offer to acquire NXP to US$44 billion from US$38 billion, when the proposed deal was first announced in October 2016.
