The world’s largest smartphone-chip makers Qualcomm and NXP Semiconductors announced on Thursday that the USD 44 Billion deal, which would have been the biggest semiconductor takeover in the world, has been terminated after failure to secure Chinese regulatory approval. Qualcomm will pay NXP USD 2 Billion in termination fee on July 26th.
The Companies have said the fall of this deal will increase the tensions between the U.S. and China, damage China’s image as an antitrust regulator and discourage deals that require Chinese approval.
Qualcomm said on Wednesday it would drop the bid for NXP unless Chinese approved of the deal, and no approval was given from China’s State Administration for Market Regulation before the deadline for the deal passed.
The deal was initially announced in October 2016 before President Donald Trump’s election and was waiting on Chinese approval before the trade dispute between the U.S. and China intensified on issues of ownership of technology and patents, according to Reuters.
Qualcomm needed approval from China because it was the source of almost two-thirds of its revenue in 2017. The Chinese Commerce Ministry declined to comment on whether the deal was approved.
Ministry spokesman Gao Feng said, “According to my understanding, the case was an anti-monopoly issue, and not related to China-U.S. trade friction.”
Qualcomm will buy back USD 30 Billion in shares with the failure of the deal to reassure investors. It also announced interestingly strong third-quarter results and optimism for the next generation of wireless data networks called 5G technology.