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The ruling clears an antitrust roadblock caused by trade tensions between the US and Beijing
Chinese regulators have approved US semiconductor company Qualcomm’s proposed US$44 billion acquisition of Dutch chip maker NXP Semiconductors, according to people with knowledge of the matter.
The decision by China’s Ministry of Commerce, or “Mofcom”, clears a months-long antitrust roadblock caused by trade tensions between the US and Beijing and will allow the takeover to proceed.
Antitrust regulators from nine nations had been required to sign off on the merger because of its potential impact on their economies, and after eight others – including the US and Japan – had approved the deal, it awaited China’s decision.
Chinese competitors have expressed concern that the combined entity would extend Qualcomm’s patent licensing business into areas like mobile payments and autonomous driving.
Details of what assets Qualcomm has agreed to shed in order to reach the agreement have not been made public, nor has the timing of the merger.
Qualcomm, which is based in San Diego, California, is the world’s largest chip maker for smartphones.
China’s approval came soon after the US Commerce Department struck a deal with embattled Chinese telecom equipment maker ZTE Corp, saving it from the brink of collapse after it was cut off from its US suppliers for breaching the terms of a sanctions settlement.
The decision also comes shortly before US President Donald Trump announces his decision on whether to impose punitive tariffs on US$50 billion worth of annual Chinese imports.
Representatives for Qualcomm and NXP Semiconductor did not immediately respond to requests seeking comment on Thursday. China’s Ministry of Commerce also didn’t immediately respond to an email outside of business hours.
The three issues – Qualcomm’s bid for NXP, the ZTE sanctions and possible US tariffs on Chinese goods – have become intertwined during one of the most fractious periods of US-China relations, driven by concerns about a record bilateral trade imbalance and Chinese acquisitions of US technology.
Tensions escalated after Trump’s national security assessment last year, in which he said China was actively working to undermine US security interests.
US lawmakers, including many in the president’s Republican Party, are seeking to curb acquisitions and alleged theft of advanced American technology, with multiple bills circulating in Congress.
The proposed National Economic Security Strategy Act of 2018, sponsored by Senator Todd Young, Republican of Indiana, seeks to check Beijing’s growing geopolitical influence and technological competitiveness. The bill would require the US president to submit a “national economic security strategy” to Congress in 2021 and bolster coordination with the National Security Council, the National Economic Council “and the heads of other relevant federal agencies” to protect strategic American interests.
Also, Senators John Cornyn, a Republican from Texas, and Dianne Feinstein, a California Democrat, have co-authored the Foreign Investment Risk Review Modernisation Act (FIRRMA), which would widen the scope of government reviews of foreign investments on national security grounds.
Cornyn has said he wants lawmakers to support the act to stop China from using its “tentacles” to undermine American security through the acquisition of advanced technologies.
Source: South China Morning Post
