Qualcomm's acquisition of NXP must be approved by nine countries including the United States, the European Union, Japan, and China. After obtaining approval from all countries involved, Qualcomm has met his most important market, China's opposition. The Chinese government has emphasized that China has rejected this M&A plan under the Anti-Monopoly Law and has nothing to do with Sino-US trade disputes. The US government also refused to comment on China's decision, but public opinion generally believes that Qualcomm's M&A plan is likely It is a major victim of the US-China trade war.
Headquartered in San Diego, Calif., Qualcomm is a global leader in 3G, 4G and 5G technologies, providing technology licensing to the world's largest manufacturers, with virtually all telecommunications equipment and consumer electronics products in the world. The NXP Semiconductors deal is critical for Qualcomm to expand its chip business footprint. Qualcomm chips focus on mobile computing and communications, while NXP chips focus on smart cars, the Internet of Things, mobile payments, etc. For NXP The merger will make Qualcomm a leader in the international semiconductor industry. This merger was originally expected to be completed by the end of last year, but it was pushed back because of the cumbersome approval process.
The US media generally linked the failure of this merger to the Sino-US trade war. AFP's report from San Francisco said that Qualcomm president threatened on Wednesday that if Beijing refused to give a green light, he would announce his resignation. He also said that It is in a bad geopolitical environment. However, he also said that Qualcomm's corporate strategy will not change anyway, and the group will continue to focus on developing strong industries. The group also announced plans to complete before the end of FY 2019. The 'most of the $30 billion stock repurchase.' Excluded the concerns of Qualcomm shareholders.
Just as the European and American public opinion attributed Beijing's veto to the trade war, China's neighboring Japan has proposed another interpretation. The Japanese economic news network pointed out on Friday that Beijing's veto of Qualcomm's mergers and acquisitions incident is obviously due to Sino-US revolves. The competition for dominance in the high-tech sector, the article pointed out that 'China's long-term strategy to promote industrial upgrading 'Made in China 2025' proposes to increase the self-sufficiency rate of semiconductors that are the basic technologies of all industries. At present, China's domestic semiconductor production scale is expected It accounts for 10-15% of the world, but this figure includes Taiwan Semiconductor Manufacturing (TSMC) and South Korea's Samsung Electronics. Ding Huiwen, CEO of Shanghai Microtechnology Industry Research Institute, believes that the pure self-sufficiency rate of Chinese companies is only about 5%. The technical level is also behind 2~3 generations.' The article commented on this, 'Maybe China's conclusion is that in the cultivation of domestic enterprises, it is not in China's interest for the already strong US companies to further develop and grow.'
In fact, protecting the country's technology development and the interests of enterprises is not only a concern in Beijing. US President Trump personally vetoed another merger in the semiconductor industry in March this year, when Broadcom proposed by Singapore. Qualcomm was acquired for US$117 billion; the US foreign auditing agency issued a warning at the time, fearing that it would affect national security interests. Called on the president to veto it. The semiconductor giant Headquarters based in Singapore has been established in the earliest year. In California, the headquarters of Malaysian Chinese were relocated to Singapore after the merger. The US is worried that Broadcom will have a Chinese-funded background. It is worried that once Qualcomm is acquired, it will be difficult to maintain its future network communication with Chinese companies. Competitive Advantage.
In fact, after President Trump took office, he has blocked a number of acquisitions related to Chinese capital, and has imposed severe sanctions on China Telecom Group Zhongxing Group. Although the US has recently opened a side to ZTE, ZTE is allowed to pay. After reparing and reorganizing the governing body, it resumed normal operations. However, it was revealed at the time that one of the conditions for the US to give a green light was that Beijing promised to approve the Qualcomm acquisition. Some news even confirmed that Liu He, Vice Premier of the State Council, who was on behalf of Chinese President Xi Jinping and the US I made a promise a few months ago.
However, a few months later, the US-China relationship has undergone a dramatic evolution. The US threatens to impose tariffs on all Chinese imports. The US Congress has also approved the government subsidies for US farmers’ losses due to trade wars. In the context of the United States and the United States, the US-China trade war has a long-lasting trend. In this context, Beijing’s veto of Qualcomm’s mergers and acquisitions as a counterattack does not surprise the outside world. The Chinese media quoted the telecom industry insiders as saying that in the trade war In the background, some M&A choices will be affected.
In fact, the Wall Street Journal raised such a sharp question: Does China veto Qualcomm's mergers and acquisitions to counter Trump's tariff policy, or to win time and space for Chinese companies to compete in the US-China 5G cyber war? The answer is no doubt, There should be two kinds of both. Moreover, the latter factor is likely to be more important.