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Trade War

China slow-walks American acquisition deal amid ZTE spat

Qualcomm's $44bn purchase of Dutch chipmaker runs into antitrust hurdles

Qualcomm's main campus in San Diego, California. China is stalling the American chipmaker's bid for Dutch peer NXP Semiconductors.   © Reuters

BEIJING -- China cast doubt Thursday on American chipmaker Qualcomm's effort to acquire a Dutch peer, citing competitive concerns in a move perceived by some as retaliation for the U.S. government's recent restrictions on a Chinese communications company.

Qualcomm's roughly $44 billion deal for automobile chipmaker NXP Semiconductors "may have a far-ranging impact on the industry and harm market competition," Gao Feng of the Commerce Ministry told reporters.

China's objection comes amid suggestions from some corners that it would be justified to block Qualcomm's deal in retaliation for the U.S. Commerce Department's crackdown on communications equipment maker ZTE. American technology exports to the company have essentially been banned for seven years.

Qualcomm announced its tender offer for NXP in October 2016. The purchase has already cleared antitrust screening in the European Union and South Korea, for instance, and only China's approval is left.

The ministry has been "discussing with Qualcomm how to eliminate the purchase's impact" on competition, but the chipmaker's proposed solutions "cannot solve" such issues, Gao said. Qualcomm apparently reapplied for approval after withdrawing its previous request Monday.

Qualcomm recently escaped a takeover effort by Singapore-based Broadcom after U.S. President Donald Trump blocked the deal.

Regarding the restrictions on ZTE, China is "watching the situation closely and preparing to swiftly take necessary measures to protect Chinese companies' legal profits," Gao said. Washington's actions may be aimed at China, but "will hurt the U.S. itself in the end," he warned, by harming "international society's trust in the American investment environment."

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