BEIJING (Reuters) – US chip maker Qualcomm ( QCOM.O ) will file an application with the Chinese government on Monday to cancel its acquisition of NXP Semiconductors for $ 44 billion ( NXPI .O ), the sources said, giving regulators more time to decide on the agreement and avoid a collapse.
The San Diego-based firm withdrew its previous antitrust petition on Saturday at the request of the Ministry of Commerce of China, days before the expiration of the deadline for April 17, the regulator to decide on the transaction expires, sources said.
Closing the acquisition of NXP, the world's largest in the semiconductor sector, is crucial for Qualcomm, which seeks to diversify its customer base and become the leading supplier of chips for the fast-growing automotive market.
The US chip manufacturer UU It has already received the approval of eight of the nine global regulators needed to complete the acquisition, and the Chinese authorization is the only one pending.
Upon renewal, Qualcomm will potentially provide the Ministry of Commerce (Mofcom) another six-month period to review its application. It will be the second time that Qualcomm resubmits its antitrust petition to Mofcom.
Analysts, however, said it is unlikely that Mofcom's decision on the agreement will come before the commercial and investment tensions between China and the United States are resolved.
"Qualcomm will have to wait for Washington and Beijing to resolve their differences before this agreement advances," said Erick Robinson, director of patent litigation and licensing in Beijing East IP.
Earlier this month, the administration of the President of the United States, Donald Trump, proposed tariffs of $ 50 billion on some 1,300 industrial, technological, transportation and medical products to force changes in the intellectual property practices of Beijing
Beijing immediately responded with a list of proposed tariffs of $ 50 billion on key US imports.
China is not blocking the agreement, "but they hold it hostage," said Andrew Gilholm, director of analysis for China and North Asia at risk consultancy Control Risks, adding that he had heard about the withdrawal of the application. of Qualcomm and the expected replenishment.
Qualcomm faced the "perfect storm" for a US company UU In China, he added. "It is at the heart of everything: there is an angle of national security, there is a competitive and Chinese industrial policy angle, so it is caught up in all the issues of the commercial war."
Qualcomm declined to comment. Mofcom did not respond immediately to a request for comment.
Antitrust concerns were believed to have been raised during the last round of discussions, but Qualcomm's position was that these were unfounded and not related to the agreement, the sources said.
It is understood that Qualcomm offered a series of guarantees to Mofcom to ensure that NXP customers do not have to purchase Qualcomm licenses.
The US chip maker, which initially announced its offer for the Dutch semiconductor company in October 2016, said in February it would increase its offer to $ 127.50 per share, valuing NXP at $ 44 billion.
That sweetener came weeks before Trump, citing national security, ordered his rival Broadcom Ltd ( AVGO.O ) to stop his proposal to purchase Qualcomm for $ 117 billion.
Qualcomm shares have fallen 13 percent since the beginning of the year, while NXP shares have lost about 3 percent during the same period.
Reports by Matthew Miller; Additional reporting by Adam Jourdan in Shanghai and Yawen Chen in Beijing; Edition of Muralikumar Anantharaman