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BEIJING / SAN FRANCISCO: Qualcomm Inc. walked away from a US $ 44 billion deal to buy NXP Semiconductors after failing to secure Chinese regulatory approval, becoming a high profile victim of a bitter Sino-U.S. trade
The world's biggest smartphone-chip maker and NXP confirmed in the day of the deal, which would have been the biggest semiconductor takeover globally,
The collapse of the deal Washington, DC, USA (submitted 2009-09-21)
Qualcomm had said that it would be a bad deal for the NXP. unless last minute reprieve from China was received. There was no word from China's State Administration for Market Regulation (SAMR), the antitrust regulator reviewing the deal, after the deadline for the deal to expire passed.
"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 deal was announced in October 2016, just days before the election of US President Donald Trump and was awaiting Chinese approval and a trade dispute between United States and China
The Trump Administration played a role in the field of advertising, and it was expected that the facelift of a ban on US chipmakers doing business with China's ZTE Corp. would clear the way for the NXP deal.
Qualcomm needed approval from China
According to my understanding, the case was an anti-monopoly issue, and not related to China-US "friction spokesman," spokesman Gao Feng told a regular news conference.
He added that while China does not want a trade war, it is not afraid of a
WHAT NEXT?
While the collapse of the deal will remove a big overhang from Qualcomm's stock, it will leave it on the hook to find new ways to grow global business sales slow.
The company said on Wednesday that it expects Apple Inc. to only use modems from a rival – likely Intel Corp. – an acrimonious battle between the two companies over pricing and licensing costs.
Huawei Technologies Co Ltd. Of the US $ 700 Million due to Qualcomm as part of an interim agreement, US $ 500 Million was paid this quarter.
Intel spokesman for Huawei said the company would not comment on speculation.
"We think moving on , reducing the amou "Mollenkopf said.
For now, Qualcomm will buy back $ 30 billion in shares if the deal fails, making good on a promise reassure investors. The San Diego Chipmaker on Wednesday also delivered surprisingly strong third-quarter results and a rosy outlook for so-called 5G technology, the next generation of wireless data networks.
The company's shares rose 5 percent in premarket trading, while those of NXP fell 11 percent.
Qualcomm will pay NXP US $ 2 billion in termination fee by 09:00 ET on July 26, as agreed.
"We believe ending the uncertainty of buying NXP is positive for Qualcomm shares," Canaccord Genuity Analyst Michael Walkley said in a note to customers.
He said he expects strong earnings growth over the next several years to the share buyback, the likelihood that the disputes with Apple and Huawei will be settled over the next year, and that
(Additional reporting by Sonam Rai in Bengaluru, Se Young Lee, Ben Blanchard and Elias Glenn in Beijing, Adam Jourdan in Shanghai, Sijia Jiang in Hong Kong and Greg Roumeliotis in New York; by Sayantani Ghosh; Editing by Meredith Mazzilli, Richard Chang, and Muralikumar Anantharaman)
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