Trump says China is now open to Qualcomm-NXP deal

Irving Hamilton
December 4, 2018

Buying NXP, which specialises in computer chips for carmakers, would enable Qualcomm to diversify growth engines at a time of weak demand for smartphones and lacklustre results, said C.Y. Yao, a Taipei-based senior analyst with research agency TrendForce. But, as USA and China relations deteriorated, the Chinese government later claimed they would block the deal, and Qualcomm announced that they were abandoning the effort this year.

At the G20 economic summit this weekend in Argentina, President Donald Trump met for more than two hours with China's Xi Jinping.

Qualcomm told Reuters that although it welcomed the development, the deadline for the deal to be completed had passed and it had no interest in resurrecting the deal.

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But in a media statement, Qualcomm said the deadline for the planned transaction has expired, and the company now "considers the matter closed", with no intention of reviving talks.

Qualcomm itself was a takeover target for Broadcom earlier in the year, but Trump blocked the proposed $140 billion attempt on national security grounds. Apparently, Qualcomm has pursued the acquisition of NXP for the company's strength in automotive chips in order to diversify beyond the smartphone field. The deal however did not go through and was called off in July this year, due to a roadblock created by Chinese regulatory bodies. Chinese regulators declined to clear the deal, though the country later expressed regret over the transaction's collapse. Qualcomm has a large presence in China so they were not left with any real options except to cancel the deal.

Qualcomm moved ahead with a stock buyback of about $30 billion that it had promised shareholders should the NXP deal fall apart. The scuppered deal was thought to be hurt by the China-US trade dispute. Afterward, Trump said Xi would consider giving a green light to a Qualcomm/NXP merger should the deal be presented to him again. The $3.4 billion (about Rs. 24,000 crores) deal, announced in March, is still awaiting Chinese regulatory approval.

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