Chinese regulators have restarted their review of Qualcomm Inc’s application to acquire NXP Semiconductors NV after having shelved the work earlier in reaction to growing trade tensions with the US, according to people familiar with the matter.
Chinese Ministry of Commerce officials have been asked to hasten the long-delayed review of the purchase and Qualcomm’s proposed remedies to protect local companies, said the people, asking not to be identified because the talks are private.
Chinese companies have expressed concern that the combined entity would extend Qualcomm’s patent licensing business into areas like mobile payments and autonomous driving.
The approval, if it comes, would mark another step back from a trade war that had threatened to engulf the world’s two largest economies.
On Sunday, US President Donald Trump stepped in to rescue ZTE Corp (中興通訊), the Chinese telecommunications equipment maker that had been in danger of failing because of a ban on buying US components.
Qualcomm approval is not definite at this point and could still be delayed, the people said.
Qualcomm declined to comment. The ministry did not respond to a faxed request for comment.
After the US announced its ZTE penalties, Chinese authorities rallied to its defense.
The ministry responded by saying it is “ready to take necessary steps” to protect domestic companies.
China, which has a say in the merger and acquisition transaction because it is the world’s largest importer of semiconductors, is seeking to reduce its dependence on foreign technology and build its own industry.
The country’s chip companies have rallied with anticipation that Beijing might increase its support for domestic competitors.
Semiconductor-related stocks fell after Bloomberg News reported the restart of the regulatory review.
Ningbo Kangqiang Electronics Co (寧波康強電子) fell as much as 7 percent, Changsha Jingjia Microelectronics Co (長沙景嘉微電子) dropped as much as 3.3 percent and Ninestar Corp (納思達) slid 2.6 percent.
The NXP transaction is crucial for Qualcomm after it fought off a hostile takeover bid by Broadcom Inc that forced its management to give commitments for future business expansion and earnings that it would now have to deliver.
Qualcomm aims to lessen its dependence on a smartphone market that is slowing, and where competitors and customers are increasingly fighting to overturn its dominance.
Qualcomm’s largest-ever transaction was announced more than a year ago and the San Diego-based chipmaker had told investors it would be closed by the end of last year.
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