said it plans to scrap its $ 44 billion acquisition of a Dutch chipmaker
NV on Wednesday after failing to obtain approval in China, making the business one of the most prominent victims of escalating trade tensions between the US and China and one central part of the strategy of the US chip giant derailed. 1
Instead, the deal came in Beijing's trade fight with Washington.
Qualcomm said Wednesday that it will not once again renew the deal, which expires shortly before midnight ET, even though it said its decision was imminent to any new material developments.
Qualcomm's decision to walk follows a series of last-minute lobbying on behalf of companies by senior US officials including finance ministers
and Secretary of Commerce
They called on their Chinese counterparts to separate the agreement's approval process from increased trade tensions, US industry leaders said.
Following the end of the agreement, a leading US technology company is on the list of US-China hit companies for the billions of dollars of goods in a range of industries
"It's not just a trade war" said
It was Prasad,
an economist at Cornell University, who worked in China during the International Monetary Fund. "There will be an open economic conflict between the two countries." The collapse of the agreement, he said, "is certainly a strong signal that China will use every available lever."
The Chinese Embassy did not immediately respond to a request for comment. Chinese officials have previously said that the deal poses potentially negative problems that are difficult to resolve.
Qualcomm said it wants to spend up to $ 30 billion to buy its own shares to reassure its shareholders. The collapse of the proposed merger also requires the San Diego chipmaker to pay a $ 2 billion NXP termination fee, based on its renewed agreement in April.
Scheduled Termination When Qualcomm Announces Earnings Up 41% The last quarter, with sales up 4%, represents a remarkable period of turmoil for the company, the world's leading manufacturer of communications chips for smartphones and other devices ,
Just four months ago, the Trump government intervened to rescue Qualcomm's 117 billion dollar hostile takeover
on the grounds that Qualcomm's technology is crucial to US national security. Qualcomm is a leading US company developing so-called fifth generation or 5G technology that will help connect a variety of new devices to wireless networks. The White House intervention has made Qualcomm a national champion in the fight against China's rise in 5G.
Qualcomm had charged the 12-day previously announced NXP deal
As a president, as a transformational, his reach across smartphones has expanded into areas such as cars and smart home devices. The deal would have added a $ 9.26 billion company last year and approximately 30,000 employees to Qualcomm, which had $ 22.29 billion in revenue and a similar workforce over the past fiscal year.
Last year, the NXP deal was approved by eight other regulators, including the US and Europe. But it dragged on with China's antitrust authority, which has a broad reach, over deals in which at least one party has a significant presence in the Chinese market.
When the deal languished, trade tensions between the US and China escalated from warlike rhetoric to tariffs from each side, aimed at $ 50 billion of imports from the other. Mr. Trump has threatened to impose tariffs on all 505 billion Chinese imports to the US
By the time the Wednesday lapsed, Mr. Mnuchin spoke to Chinese Vice Minister Liu He for approval, and Mr. Ross did the same with China's ambassador to the US,
according to the executives of the US industry. The US officials argued that the Qualcomm decision should be made on the basis of the agreement.
Spokespersons for Finance and Trade rejected Tuesday's efforts by the US government.
Their footsteps followed after President Trump eased the US fines
to allow the Chinese telecommunications giant to continue operating after it has been proven to have violated US sanctions against North Korea and Iran. Some US government and industry officials had expected that the ZTE efforts would cause China to reciprocate and approve the Qualcomm NXP agreement.
Many Qualcomm shareholders had already lost faith that the NXP deal would take place and were eager for the company to continue. This and strong quarterly results helped Qualcomm's shares in after-hours trading rise more than 6% to more than $ 63 even though they were well below the $ 69 level when Broadcom resumed trading in January.
Qualcomm reported a net profit of $ 1.22 billion for the third quarter, an increase of 41% over the previous year. The conversion amounted to 5.6 billion US dollar. The results were supported by a partial settlement of $ 500 million in a patent dispute with an unnamed company that licensed Qualcomm technology. The company was previously identified as Huawei Technologies Co. A Huawei spokesman did not respond immediately to a request for comment.
Nonetheless, the collapse of the NXP deal is weighing on Qualcomm and its chief executive,
who in March did not receive a majority vote from the shareholders when they were elected to the Board. The conclusion of the NXP agreement was seen as a key step in restoring investor confidence after Qualcomm's shares lost more than a quarter of their value over the past four years, while the PHLX Semiconductor Index more than doubled.
filed a lawsuit over patent fees
long one of his biggest customers. And Mr. Mollenkopf is facing an imminent challenge by the former CEO
Son of co-founder of Qualcomm, Irwin Jacobs, who is trying to raise funds to buy the company and make it private – an offer that is largely viewed as a vision.
-Yoko Kubota has contributed to this article.