Recently the White House released a statement that declared that China is interested in approving a previous deal that was forwarded by U.S. Chip manufacturer Qualcomm to buy its Dutch counterpart NXP Semiconductors. The deal previously fell apart as it failed to secure Chinese regulatory approval.
Steve Mollenkopf, CEO, Qualcomm, was quoted by sources to say that the failure of the deal was a side effect of the mounting tensions due to trade imbalance between the U.S. and China. The $44 billion reportedly received approval from the antitrust authorities in America, Japan and Europe but fell through when China refused to approve of it by the 25 July 2018 deadline.
Recently U.S. President Donald Trump and Chinese President Xi Jinping agreed on a 90-day truce on additional tariffs as both sides are looking to de-escalate tensions in a trade war that is proving damaging to both. After one such meeting between President Trump and President Xi, it was reported that China is now open to approving the previously unapproved Qualcomm-NXP deal if it is to be presented again.
However, Reuters reports that Qualcomm representatives made it clear through an email, that the company considers the matter closed. The email declared that though the company is grateful for the reconsideration and the comments, the deadline for the transaction has expired and hence the contemplated deal has been terminated.
Chinese regulators have not made any immediate comment.
According to reliable sources, Qualcomm has already paid a $2 billion to NXP as a fee to terminate the deal and has launched a stock repurchase program worth $30 billion. 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 dissolution of the deal is one of the most apparent repercussions of the escalating trade between China and the United States, two of the largest economies in the world. But both countries are now putting in efforts to scale back tariffs as it has proved detrimental for both economies.