US: Qualcomm announces termination of NXP deal

Semiconductor maker Qualcomm will drop its US$44 billion bid for NXP, nearly two years after first announcing its plans to acquire the Dutch competitor, the company announced late on Wednesday, July 25.

Qualcomm will pay NXP a US$2 billion breakup fee, according to the company.

Qualcomm first announced plans to acquire NXP in October 2016, but the deal faced regulatory roadblocks, heightened by tensions between the US and China. The company has extended its offer before, but said in April that it would let its offer expire if it was not approved by Chinese regulators by July 25.

The deal’s planned termination came as Qualcomm announced profit jumped 41% in its latest quarter on a 4% gain in revenue. The big jump in profit partly reflects a comparison to a year-earlier quarter that was the first in years to not include patent royalties from Apple devices.

The deal’s demise puts a US technology company atop a list of those affected by the trade battle, which has produced tit-for-tat tariffs by the US and China on billions of dollars of goods across a range of industries.

“It’s not just a trade war anymore,” said Eswar Prasad, a Cornell University economist who worked in China while at the International Monetary Fund. “It’s becoming a more open economic conflict between the two countries.” The deal’s collapse, he said, “certainly is a strong signal that China is going to use every available lever.”

Full Content: The Wall Street Journal

Want more news? Subscribe to CPI’s free daily newsletter for more headlines and updates on antitrust developments around the world.