Qualcomm Inc., the world’s biggest maker of chips for mobile phones, said it will drop its US$44 billion bid for NXP Semiconductors after failing to secure regulatory approval from China, Reuters reports.
“We obviously got caught up in something that was above us,” Qualcomm chief executive Steve Mollenkopf said in an interview after Wednesday’s announcement, apparently referring to the widening trade tensions between the United States and China.
“We think moving on, reducing the amount of uncertainty in the business and increasing the focus is the right thing to do with the company.”
Qualcomm needed approval from China, the last of nine global regulators to be consulted, because the country accounted for nearly two-thirds of its revenue last year.
Barring a last-minute reprieve, the chipmaker said in its results release it would make good on a pledge with NXP to call off the merger if it had not won Chinese regulatory approval by 23:59 Eastern US time on Wednesday.
Investors expressed relief at the end of the project that has dragged on since 2016, all while Qualcomm fended off a US$117 billion takeover bid from Broadcom Inc., fought in court with Apple Inc., and faced billions of dollars in fines from antitrust regulators around the world over its licensing practices.
The San Diego chipmaker delivered surprisingly strong fiscal third-quarter results and a rosy outlook for so-called 5G technology, the next generation of wireless data networks.
Those numbers, combined with a US$30 billion share buyback plan that Qualcomm had promised to implement if the NXP deal fell through, sent its shares up almost 6 percent to US$62.95 after the bell.
Qualcomm reported a 4.2 percent rise in quarterly revenue on Wednesday, helped by demand for its latest Snapdragon chipset from smartphone customers that include Samsung Electronics and Xiaomi Corp.
Revenue rose to US$5.60 billion in the quarter ended June 24 from US$5.37 billion a year earlier.
Net income attributable to Qualcomm rose to US$1.22 billion or 82 US cents per share, from US$866 million, or 58 US cents per share a year earlier.
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