SAN FRANCISCO — The finger-pointing over the scuttled $44 billion transaction between the chip makers Qualcomm and NXP Semiconductors has begun.
Richard Clemmer, chief executive of NXP, had some harsh words on Thursday for officials in China over the deal’s collapse amid a trade war between Washington and Beijing. The acquisition was terminated after it failed to secure regulatory approval from Chinese authorities before a deadline set by the companies at midnight Eastern time on Wednesday.
In an interview on Thursday, Mr. Clemmer said Chinese authorities gave no explanation for withholding approval for the transaction. He said that there were no government requirements or regulations that the deal did not meet, adding that Qualcomm and NXP had both agreed to undisclosed concessions to address antitrust concerns raised by Chinese authorities.
“For the issues they raised, remedies were provided and they agreed on those remedies,” Mr. Clemmer said of Chinese officials. “There was no clear explanation of why they wouldn’t approve it.”
Mr. Clemmer and NXP had tried for nearly two years to get the deal done. In 2016, Qualcomm and NXP had struck an agreement to combine. But the transaction could not be completed until it had obtained regulatory approval from nine jurisdictions. Eight of those, including the United States, had approved the deal; China had been the lone holdout.
The situation was complicated by the Trump administration’s recent trade moves, including placing tariffs on numerous Chinese goods. Trade experts said Chinese authorities appeared to be withholding approval of the Qualcomm and NXP deal to gain negotiating leverage in retaliation.
With the deal’s failure, NXP said it would receive a $2 billion termination fee from Qualcomm, while Qualcomm said it would buy back up to $30 billion of its stock.
On Thursday, a spokesman for the Chinese Commerce Ministry said trade tensions had nothing to do with the end of the deal.
Mr. Clemmer said Thursday that NXP assumed until the last minute that Chinese officials “would come to reason and it would be approved.”
The fact they did not, he said, suggested that international politics rather than antitrust issues were solely to blame for the deal’s collapse — a worrying sign for others contemplating cross-border transactions. “It’s really concerning,” Mr. Clemmer said.
Steve Mollenkopf, Qualcomm’s chief executive, has shied away from singling out Chinese officials but has also blamed the trade war for the deal’s collapse.
Mr. Clemmer said top American officials, including Treasury Secretary Steven Mnuchin, actively communicated with Chinese officials in support of the deal.
Mr. Mnuchin, in an interview with CNBC on Thursday, said he was very disappointed that the deal was not approved. “We’re just looking for U.S. companies to be treated fairly,” he said.
Even with the deal’s collapse, Mr. Clemmer said he was confident in NXP’s path. The Dutch company, the descendant of chip operations that were once part of Philips and Motorola, on Thursday reported quarterly earnings that included a 4 percent increase in total corporate revenue and roughly flat profits.
NXP is the largest supplier of chips used in cars, a position that Qualcomm hoped to exploit to broaden beyond communications chips for smartphones. Mr. Clemmer said NXP’s position is particularly strong in radar technology that will become important in the development of self-driving vehicles.
While rivals like Nvidia have an edge in chips that act as the brain in autonomous cars, NXP sells other processors and communications chips for cars that will be sold in higher volume, Mr. Clemmer said.
Like Qualcomm, NXP announced a large stock buyback to help lift its share price after the transaction’s failure. The company said Thursday that it would spend up to $5 billion in repurchasing its shares.
Orignially published in NYT.