Qualcomm to abandon $44bn NXP tie-up

Qualcomm said it will terminate its agreement to buy NXP and buy back $30 billion of stock

Qualcomm, the American chipmaker, said last night that it would terminate its proposed $44 billion takeover of NXP Semiconductors, its Dutch rival, after it emerged that Chinese regulators were not likely to give the deal the go-ahead.

This is just the latest blow for Qualcomm, which has in recent months found its business dealings tied to broader trade negotiations between the United States and China.

The San Diego-based company, which employs more than 33,000 people, is now stuck with paying NXP a $2 billion breakup fee.

There was no word from China's State Administration for Market Regulation or Qualcomm after the time for the deal to expire passed. Qualcomm did not immediately respond to a request for comment.

Its shares rose 6 percent in after-hours trading.

While the collapse of the deal will remove a big overhang from Qualcomm's stock, it will leave it on the hook to find new ways to turbocharge growth as global phone sales slow. But it cited progress on one of two major patent royalty conflicts, thought to be with Chinese phonemaker Huawei Technologies Co Ltd, in the form of a $700 million interim agreement. The tech industry has become a key battleground in the trade fight between the world's two largest economies.

"We reported results significantly above our prior expectations for our fiscal third quarter, driven by solid execution across the company, including very strong results in our licensing business", Mollenkopf said. Qualcomm said the failure of Chinese regulatory authorities to approve the transaction had forced it to scuttle the deal, according to various media.

NXP Semiconductors shares fell nearly 4 percent to $94.50. However, as a countermeasure to the U.S. handling of ZTE, they had not yet given permission for the Qualcomm NXP deal; the deadline expires today.

Dealmakers advising on mergers and acquisitions hoped the fallout would be limited to the technology sector in which China is racing for primacy against the United States. It is said that the purchase could still be completed in this way.

The company said on Wednesday that it expects Apple Inc (AAPL.O) to exclusively use modems from a rival - likely Intel Corp (INTC.O) - amid an acrimonious battle between the two companies over pricing and licensing costs.

Qualcomm's experience suggests this could already be happening.

With iPhone 7 and 7 Plus launch in 2016, Apple began using Intel chips in some variants of iPhones.

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