Qualcomm says NXP deal is dead

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Popular US-based mobile chip maker Qualcomm could still reconsider a move to buy NXP after Chinese President Xi Jinping's statement at the G20 Summit that the matter could be revisited, suggests an analyst for TrendForce based out of Taipei. After one such meeting between President Trump and President Xi, it was reported that China is now open to approving the previously unapproved Qualcomm-NXP deal if it is to be presented again.

Since then, Qualcomm has paid a United States dollars 2 billion breakup fee to NXP for the failed deal and commenced a share repurchase program it had promised its shareholders, should the deal fall through.

The Chinese government's official statement released following the talks did not mention a discussion of the Qualcomm deal, however.

Qualcomm had to pay NXP a $2 billion (approximately Rs. 14,100 crores) fee to terminate the deal. The deal previously fell apart as it failed to secure Chinese regulatory approval.

By allowing the Qualcomm deal to run itself out, Beijing was seen to be flexing its economic muscles while retaining negotiating power with a Trump administration that has threatened to slap tariffs on virtually all Chinese imports. Qualcomm used share buybacks of $5 billion to try to maintain its stock price for their shareholders after the deal was cancelled. Xilinx is now vying to acquire Israeli chip maker Mellanox Technologies after it chose to run an auction to sell itself, according to people familiar with the matter.

A representative for Xilinx declined to comment.

A more near-term test being watched by dealmakers is KLA-Tencor Corp pending acquisition of fellow semiconductor equipment maker, Israel's Orbotech Ltd.

Competition regulators in eight countries had approved the takeover. KLA-Tencor's CEO said on the company's last earnings call that he expects the deal to close by year end.

China offered more than $1.2 trillion in additional commitments on trade at the Xi-Trump dinner, Treasury Secretary Steve Mnuchin said on Monday.

The Chinese government's top diplomat, State Councillor Wang Yi, was less specific, telling reporters China will import more products, based on market demand, from the United States in efforts to gradually ease imbalances in two-way trade.

USA lawmakers also passed reforms earlier this year that increased CFIUS' scrutiny of deals.

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