China's Ministry of Commerce (MOFCOM) has decided to approve Qualcomm's $44 billion purchase of NXP Semiconductors, according to the South China Morning Post. China is the last of nine countries that needs to approve the deal in order for it to close. The Ministry of Commerce has not made an official announcement, and in the hours following the news, trade tensions escalated again as the Trump Administration announced new tariffs.
Today Qualcomm again extended the deadline on its offer for NXP. Shareholders now have until June 22 to tender their shares.
It's been almost two years since Qualcomm announced an agreement to buy NXP. The San Diego chipmaker has kept its eye on the prize throughout a complex series of setbacks that included shareholder demands for a higher price, international trade disputes, and Broadcom's hostile bid for Qualcomm.
At this point, many of those problems seem to have been resolved. Qualcomm increased its offer price from $38 billion to $44 billion, President Trump issued an executive order banning Broadcom from buying Qualcomm, and the U.S. and China appear to be cooperating on several key issues.
"We see all of the progress with many things between the U.S. Administration and China," Qualcomm Technologies President Cristiano Amon told Fierce Wireless when asked about the NXP deal.
This month, the Trump Administration agreed to repeal restrictions that prevented U.S. companies from doing business with China's ZTE, which the Commerce Department had found guilty of violating a U.S. trade embargo by using American equipment to help Iran build a wireless network. Some analysts thought MOFCOM was withholding approval of the Qualcomm/NXP deal pending a repeal of the sanctions on ZTE. Now ZTE is back in business in the U.S. and Qualcomm reportedly has the approval it needs to buy NXP.
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Looking ahead
Qualcomm's Amon said the areas of the company's business that overlap with NXP's business are minimal. "There is almost no overlap," he said. "There are a few small things. They have maybe a smaller Bluetooth, Wi-Fi small legacy business. ... They have a very significant position in providing front-end for base stations and we provide front-end to the smartphone devices. ... so the good thing about it is there is no overlap."
The NXP acquisition will not change Qualcomm's overall strategy, Amon said. But it will mean Qualcomm can execute that strategy faster.
"The great thing about it is that actually we can bring mobile technology and create a new innovation cycle in many of the systems and products they have," Amon said. He added that NXP is the global leader in automotive chips and Qualcomm wants to use its expertise to connect automotive subsystems to the internet to enable telemetry, software upgrades and data collection for machine learning. "The fact that they have an automotive business, a networking business and a microcontroller IoT business, that just allows us to go even faster," he said.