uploads///A_Semiconductors_QCOM NXP Combined Company

Why China May Be Holding up Qualcomm’s Acquisition of NXP

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Qualcomm’s bid to acquire NXP hits a snag

American chipmaker Qualcomm’s (QCOM) proposed $44 billion acquisition of Dutch company NXP Semiconductors (NXPI) has hit a snag recently. It is being blocked by Chinese antitrust authorities, whose approval is required for the acquisition to go through. Qualcomm has received permission from eight other major antitrust regulators globally.

The move by the Chinese government to delay the acquisition comes just as US-China trade war tensions are growing. Earlier this month, the United States banned China’s ZTE, a telecom equipment maker, from purchasing American technology for seven years. The Chinese Ministry of Commerce said on April 19 that the American chipmaker needs to do more to make sure the acquisition won’t give the merged entity an unfair advantage.

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China is trying to protect its local players

Last month, Donald Trump blocked Singapore-based Broadcom’s (AVGO) hostile takeover of Qualcomm, saying that the acquisition could help China beat the United States in emerging 5G (fifth-generation) technology.

The Dutch chipmaker is key to Qualcomm’s aim to reduce its reliance on the slowing smartphone market, where customers such as Apple are increasingly trying to reduce their reliance on Qualcomm. China is the world’s biggest market for semiconductors, and the Chinese government has made allocating funds to local chipmakers a priority.

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