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U.S. and China Talk Up Qualcomm-NXP Merger. There’s Just One Problem: The Deal Is Dead

One major victim of the U.S.-China trade war was the planned takeover of the Dutch semiconductor-maker NXP by the U.S.’s Qualcomm — it was going to be the industry’s biggest-ever merger, but Chinese regulators refused to clear it, and it sank in July when time ran out for regulatory clearance.

On the weekend the U.S. and China announced an agreement that will ward off an escalation of the trade war over a 90-day period of negotiations. And in its statement about the truce, the White House said China’s President Xi Jinping had stated he was “open to approving the previously unapproved Qualcomm-NXP deal should it again be presented to him.”

That’s nice, said Qualcomm. There’s just one hitch: it’s too late now.

“While we were grateful to learn of President Trump and President Xi’s comments about Qualcomm’s previously proposed acquisition of NXP, the deadline for that transaction has expired, which terminated the contemplated deal. Qualcomm considers the matter closed,” a company spokesperson told Reuters

The failure of the $44 billion merger deal was expensive for both sides: Qualcomm had to pay NXP a $2 billion breakup fee, and both Qualcomm and NXP launched huge share buybacks to mollify annoyed investors.

Competition regulators in eight countries had approved the takeover. However, the Chinese regulators insisted that antitrust issues remained, hence their refusal to give the green light — they denied the episode had anything to do with the trade war.

Analysts noted at the time that, trade friction aside, the refusal may also have had something to do with competition between China and the U.S. over the imminent rollout of “5G” mobile broadband technology, which will largely be used to link “smart” gadgets and machinery to the Internet. A combined Qualcomm-NXP operation would have had an industry-dominating intellectual property portfolio in this area, covering everything from wireless communications to microcontrollers and sensors.