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A $ 44 billion technology contract has just become the latest victim of escalating trade tensions between China and the United States.
Qualcomm was waiting for nearly two years the purchase of the Dutch chip maker NXP the obstacles The massive agreement, announced in October 2016, had been approved by the regulators of eight other jurisdictions, including the United States. European Union and South Korea. China was the only holdup.
The final deadline for the deal was Thursday afternoon in China – and the Beijing Ministry of Commerce just let the time go by.
Qualcomm ( QCOM ) warned investors that this would probably happen. CEO Steve Mollenkopf said on Wednesday that if China did not approve of Qualcomm's agreement with NXP, the company would move away from it .
The lingering uncertainty surrounding such an important agreement "presents an increased risk" Mollenkopf said. "We are assessing this risk against the likelihood of a change in the current geopolitical environment, which we did not believe to be a highly likely outcome in the near future."
The San Diego-based company, which employs more than 33,000 people, is now blocked by paying NXP a $ 2 billion break-up fee.
NXP did not respond immediately to a request for comments outside of office hours.
This is only the last blow to Qualcomm, who has seen in recent months that his business relations were linked to broader trade negotiations between the United States and China. The technology industry has become a key battleground in the commercial struggle between the two largest economies in the world.
Related: Do trade wars hurt business? Ask Qualcomm
In March, President Donald Trump blocked a $ 117 billion takeover of Qualcomm by his rival Broadcom (19459013) AVGO ) arguing that this could help China the United States in the development of 5G technology.
The following month, the Trump administration imposed a crippling ban on China's ZTE smart phone and telecommunications company, preventing it from buying crucial pieces from US companies.
The ban was a double hit for Qualcomm: As ZTE's leading chip supplier for smartphones, Qualcomm lost a significant amount of business during the three-month ban, and then its merger with NXP was stuck in the fate of ZTE's survival.
After the US government concluded a new agreement allowing ZTE to resume operations with US companies, there was hope that Beijing would approve the Qualcomm-NXP agreement.
But the United States imposed duties on Chinese goods worth $ 34 billion last month, citing the so-called Chinese theft of US intellectual property as justification. China responded in kind. President Donald Trump then threatened to target an additional $ 200 billion worth of Chinese products.
Related: China tries to put an end to its foreign technological habit
China also wants to develop a competitive chip industry and reduce its dependence on foreign suppliers of chips .
The Qualcomm-NXP agreement would have helped the United States to expand its influence in the global flea industry and "would have negative impacts on a wide range of industries in China," he said. said JH Lin, an analyst at Trend Force.
Qualcomm would also have enhanced its technological know-how, which "would represent a huge challenge or even a risk for Chinese chip makers and the domestic semiconductor industry in China," Lin added.
CNNMoney (Hong Kong) First published on July 26, 2018: 12:31 ET
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