Qualcomm Scraps NXP Deal Amid U.S.-China Trade Tensions

Qualcomm scrapped its $44 billion bid for rival chipmaker NXP after Chinese regulators failed to approve the largest-ever deal in the chip industry, according to Bloomberg.

The aborted takeover may be the highest-profile victim yet of the trade spat between China and the U.S., with every other relevant jurisdiction in the world clearing the bid months ago. While China denied its decision had anything to do with trade tensions, Qualcomm CEO Steve Mollenkopf said "there were probably bigger forces at play here than just us.

The U.S. company will have to pay $2 billion to NXP, buy back $30 billion of stock to appease investors, and reset its strategy as it tries to reduce its reliance on the slowing smartphone market, where it’s facing more competition and legal battles with customers. NXP’s management, after waiting almost two years for the deal to go through, will now have to find a way to convince customers and investors it has a strong future as an independent company.

Qualcomm had originally assured investors that approval would come by the end of 2017. In April, the two companies extended the agreement as Qualcomm worked out concessions with China, the only jurisdiction that hadn’t approved it. But the sign-off was dragged into the trade dispute as U.S. President Donald Trump accused the mainland of creating an unfair imbalance in trade between the world’s two largest economies.

The deal is about market monopoly, Gao Feng, a spokesman for China’s commerce ministry, told a briefing in Beijing. He referred reporters to the State Administration of Market Regulation for more information. The SAMR had been set to approve the acquisition, people familiar with the process said in recent months. But as the trade dispute continued, one particular sticking point was ZTE.