Chinese regulators are seeking additional concessions from Qualcomm Inc before approving its proposed purchase of NXP Semiconductors NV, further complicating the long-delayed deal and possibly adding to trade tensions between China and the US.
The proposed acquisition would substantially impact the technology industry and might negatively affect the market, a Chinese Ministry of Commerce spokesman said.
Bloomberg News reported last month that the ministry wanted more protection for local companies, which are concerned the combined entity would extend Qualcomm’s patent licensing business into areas like mobile payments and autonomous driving.
“The authority has talked with Qualcomm about how to reduce the negative impact on the market and has conducted market tests using the remedy plan from Qualcomm. An initial investigation shows Qualcomm’s plan can hardly solve relevant problems,” Chinese Ministry of Commerce spokesman Gao Feng (高峰) said.
Qualcomm withdrew its application for approval this week and plans to refile it, he said.
“We will continue to conduct a fair investigation and review according to the rules, including anti-monopoly law,” he said, adding that a decision is unlikely to come soon because the ministry needs a “large amount of time to investigate, collect evidence and analyze.”
The comments come amid increasing trade tensions between the world’s two largest economies. US President Donald Trump has threatened tariffs on US$150 billion of Chinese imports for alleged violations of intellectual property rights, while Beijing has vowed to retaliate on everything from US soybeans to planes.
The US on Monday imposed a seven-year ban on China’s ZTE Corp (中興) that prevents the telecommunications equipment maker from buying technology from US suppliers, a devastating blow to its global aspirations.
The ministry responded by saying that it is “ready to take necessary steps” to protect domestic companies.
On Wednesday, ZTE postponed the release of quarterly earnings, saying it needs time to assess the effect of the order that bans US companies from selling it parts, which could undermine its ability to manufacture equipment.
ZTE, a maker of telecommunications equipment and smartphones, was due to release its results yesterday.
US companies are estimated to provide 25 to 30 percent of the components used in the company’s equipment.
The firm announced the delay as components makers, wireless carriers, retailers, telecommunications firms and Alphabet Inc’s Google, developer of the Android operating system, sought to clarify how they would be affected by the order.
ZTE said its board postponed a meeting to approve the results while it reviews the order. Trading in its shares has been suspended in China since Tuesday.
The US is ZTE’s top smartphone market, accounting for 46 percent of its shipments, followed by China at 24 percent, research firm International Data Corporation said.
Additional reporting by Reuters
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