Last summer, American chipmaker Qualcomm and its closest rival NXP have been cooking up a merger deal. However, this merger deal was abandoned following the rising trade tension between two of the world's largest economies. Recently, United States President Donald Trump said that China is now willing to approve the deal.
While this latest development might prove to be positive for both parties, some observers have noted that it might be too late to salvage the deal. It is important to note that both parties, Qualcomm and NXP, have already walked away from the deal. Further aggravating this is the fact that Qualcomm even paid a $2 billion penalty in order to distance itself away from the deal.
Chinese President Xi Jinping and United States President Donald Trump met on Saturday during the G20 Summit in Buenos Aires, Argentina. President Trump told reporters that President Xi said that he is reconsidering China's initial decision regarding the Qualcomm-NXP deal. It is important to note that China initially withholds the approval of the merger between the two chipmakers. The deal was reportedly worth $44 billion.
In a statement with CNN, President Trump said "If that deal came back to him, he would most likely approve it quickly. Which is a big thing."
In July, Qualcomm, which is based in California, confirmed that the company is terminating its proposed takeover of its rival NXP which is based in The Netherlands. Qualcomm cited China's cancellation of its regulatory application as one of the main reason why the deal did not push through.
According to reports, Qualcomm and NXP have been patiently waiting for two years to win the regulatory approval from China. The massive merger between Qualcomm and NXP have been approving in eight other jurisdictions. These regions include South Korea and the European Union. The merger was first announced in October 2016.
As of this writing, it is still not clear whether Qualcomm and NXP will pursue the merger again. Following the termination of the proposed deal, Qualcomm opted with a stock buyback worth about $30 billion. In July, Qualcomm paid NXP $2 billion to completely terminate the planned merger.
Following the meeting of President Xi and President Trump, China issued an official statement claim that President Xi did not mention his willingness to reconsider the approval of the Qualcomm-NXP deal should he deal be put up again.
According to many analysts, the dissolution of the Qualcomm-NXP deal is just one of the many signs of how the trade war between China and the United States affects the global economy and trade.
