QCOM QUALCOMM Inc

By Micah Maidenberg 

Qualcomm Inc. said it plans to scrap its $44 billion purchase of Dutch chip maker NXP Semiconductors NV on Wednesday after failing to secure approval in China, making the deal one of the most prominent victims of spiraling U.S.-China trade tensions and derailing a central part of the U.S. chip giant's strategy.

China was the last of nine markets that needed to approve the deal, which would have been among the biggest ever between technology companies. The acquisition was announced in October 2016 and extended in April as the chip makers sought approval from China's competition regulators.

Instead, the deal became mired in Beijing's trade fight with Washington. Qualcomm said Wednesday it won't again extend the agreement, which expires just shy of midnight ET, though it said its decision was pending any new material developments.

Qualcomm's decision to walk follows a round of last-minute lobbying on the company's behalf by senior U.S. officials including Treasury Secretary Steven Mnuchin and Commerce Secretary Wilbur Ross, who tried to persuade their Chinese counterparts to separate the deal's approval process from broader trade tensions, U.S. industry executives said.

The deal's demise puts a leading U.S. technology company atop a list of those affected by the trade battle, which has produced tit-for-tat tariffs by the U.S. and China on billions of dollars of goods across a range of industries.

"It's not just a trade war anymore," said Eswar Prasad, a Cornell University economist who worked in China while at the International Monetary Fund. "It's becoming a more open economic conflict between the two countries."

The deal's collapse, he said, "certainly is a strong signal that China is going to use every available lever."

Qualcomm said it plans to spend up to $30 billion buying its own stock to placate shareholders. The collapse of the planned merger also requires the San Diego chip maker to pay a $2 billion termination fee to NXP, based on their renewed agreement in April.

--Yoko Kubota contributed to this article.

Write to Micah Maidenberg at micah.maidenberg@wsj.com

(END) Dow Jones Newswires

July 25, 2018 16:39 ET (20:39 GMT)

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