In a prepared statement the CEO released he said that Qualcomm intends to end its purchase agreement to buy NXP when that agreements expires at the end of today, pending new material developments.
While a slight chance still existed that the State Administration for Market Regulation (SAMR) in China could make an announcement at the last minute before the deadline of 11:59 pm ET expired, Qualcomm said it is unlikely that an agreement will be reached, says people who are close to the situation at hand, but requested anonymity because the discussions of this nature remain private.
Qualcomm has been waiting close to two years to acquire NXP the Dutch chipmaker due to global regulatory hurdles it has faced. The $44 billion deal was announced during October of 2016 and was approved in eight other regions or countries by regulators including South Korea and the European Union, but China was the only holdout.
The deadline came and went at midday on Thursday in China and the Ministry of Commerce in Beijing simple did nothing and time eventually ran out.
Qualcomm warned its investors that it would likely transpire. Mollenkopf said that continued uncertainty brought about heightened risk and the risk must be weighed against the likelihood of change in the ongoing geopolitical environment that the company does not believe would have a high probability anytime in the near future.
Qualcomm must now pay a breakup fee to NXP of $2 billion. This is another blow Qualcomm has taken of late as over the past few months its business dealings that are linked to broader trade negotiations between Washington and Beijing have created major headaches.
The tech industry is a big battleground in the ongoing trade battle between the two largest economies in the world.
President Donald Trump, last March blocked a takeover of Qualcomm worth $117 billion by Broadcom arguing that it might help China to beat the U.S. in 5G technology development.
In April, the White House administration placed a crippling ban on ZTE the Chinese company that makes smartphones and telecommunications equipment, which prevented it from purchasing crucial part from companies in the U.S.
Qualcomm was hit was a double whammy from the ban: It was a major supplier for smartphones made by ZTE with its chips, therefore it lost a large amount of business while the ban of three months was in place, and then its merger with NXP was tied up in whether or not ZTE would survive.