Delays in China that led Qualcomm to call off its acquisition of a rival microchip maker had nothing to do with escalating trade tensions with the United States, a spokesman for the Chinese Commerce Ministry said on Thursday.
Qualcomm and NXP Semiconductors first announced their $44 billion union nearly two years ago. Qualcomm is based in San Diego and NXP in the Netherlands, but both do significant business in China, which is why its antimonopoly authorities had say over whether the deal would go through.
But as frictions between the United States and China intensified this year, Beijing’s prolonged antitrust review came to be seen as a form of leverage over the negotiations. The Trump administration imposed tariffs on $34 billion worth of Chinese goods this month, and Beijing immediately retaliated with levies of its own.
Chinese regulators never formally rejected the deal, which had been approved by eight other jurisdictions, including the United States. But Beijing dragged its review out to more than 20 months.
Speaking Thursday at a news conference after Qualcomm said it was expecting to walk away from the deal, Gao Feng, a spokesman for the Ministry of Commerce, denied the link to trade, according to a transcript posted on the ministry’s website. Qualcomm and NXP formally announced the cancellation later on Thursday.
“As of what I know, the case is about antimonopoly law enforcement,” Mr. Gao said, referring reporters to the State Administration for Market Regulation, which has official oversight of antitrust matters. The market regulator has not commented on the matter recently.
“It has nothing to do with Sino-U.S. trade frictions,” he added.
Speaking of the frictions, Mr. Gao said they were a result of “domestic politics” in the United States.
“It has been provoking trade wars everywhere,” he said. “The responsibility lies entirely with the United States.”
On a conference call with analysts Wednesday, Steve Mollenkopf, Qualcomm’s chief executive, said the company decided to scrap the agreement because of a need to end the uncertainty surrounding it.
“We weighed that risk against the likelihood of a change in the current geopolitical environment, which we didn’t believe was a high-probability outcome in the near future,” he said.
Advanced industries like semiconductors are at the heart of the conflict between The United States and China, the world’s two largest economies. To stake out leadership positions in the technologies of tomorrow, both are supporting national champions and sheltering them against foreign competition.
This year, President Trump moved to shield Qualcomm, which makes chips that help smartphones communicate, from a hostile takeover bid by a rival, Broadcom. Washington officials said that the acquisition would lead to diminished spending on wireless research, jeopardizing Qualcomm’s — and, by extension, the United States’ — technological edge, particularly against China.
This was not Qualcomm’s first run-in with Beijing. In 2015, the company was ordered to pay a $975 million fine after the authorities said it had abused its market power.
China’s antitrust regulator is investigating possible price-fixing at three foreign makers of memory chips: the South Korean companies Samsung Electronics and SK Hynix, as well as Micron Technology of the United States. In other industries, too, foreign companies including Microsoft, Volkswagen and Chrysler have been investigated for what China says are anticompetitive practices.
Beijing has rejected the charge, made by American business groups and others, that it uses antimonopoly law to advance industrial policy. In May, Chinese officials approved Toshiba’s sale of its microchip unit to an American-led group, though also after a lengthy delay.
Follow Raymond Zhong on Twitter: @zhonggg.
