Beijing dodges blame over demise of Qualcomm-NXP Semiconductor merger


Sat, Jul 28, 2018 - Page 10

China yesterday sought to deflect blame after US chipmaker Qualcomm Inc dropped a merger with Dutch rival NXP Semiconductors NV over its failure to receive Chinese regulatory blessing, with Beijing saying it was still open to discussions.

The unexpected statement came a day after the US tech giant called off the planned US$43 billion merger, which had failed to receive approval from Chinese anti-trust authorities — an apparent casualty of ongoing trade tensions between Washington and Beijing.

The Chinese State Administration for Market Regulation said it “knows that Qualcomm and NXP have decided to abandon the transaction, and finds that regrettable.”

“The results of our evaluation show that Qualcomm’s latest plan cannot resolve competition issues... We hope to continue communicating with Qualcomm to find a solution within the review period,” it said.

It was not immediately clear whether the regulator’s statement meant the deal could potentially be revived.

“Companies including Qualcomm, NXP are welcome to do business in China as long as they bring benefits to the Chinese people and help create a business environment that is international, lawful and convenient,” the regulator added.

The tie-up was aimed at creating a diversified chipmaker combining Qualcomm’s dominant position in smartphones and NXP’s foothold in the market for chips that power “Internet of Things” connected devices.

Chinese regulators said the deal would have created a virtual monopoly with “deep and far-reaching” consequences.

Qualcomm said it would pay NXP a US$2 billion breakup fee and begin a US$30 billion stock repurchase plan.

US Secretary of the Treasury Steven Mnuchin expressed disappointment that the deal fell through, but sidestepped questions on whether it was related to the standoff with China.

Officials in Beijing have also denied any link between the merger’s collapse and China-US trade frictions.

Meanwhile, Chinese regulators on Thursday approved a proposed merger between French lens maker Essilor International SA and Luxottica Group SpA, the Italian eyewear company that produces Ray-Ban and Oakley sunglasses.

The deal had already been approved in four other key markets — the US, Europe, Canada and Brazil.

However, China’s consent came attached with a list of conditions restricting the combined company’s operations in China, including not selling eyewear below cost without justifiable reason.