Qualcomm, a leading chip maker that supplies mobile phones with wireless technology, has been caught in the crossfire of the trade war between the United States and China. The company, which President Trump tried to protect from a hostile takeover bid by Broadcom in 2018, has been waiting for nearly two years for China to approve its $44 billion acquisition of another chip maker, NXP Semiconductors.
But China's prolonged review of the deal is widely seen as a form of retaliation for Trump's tariffs on Chinese goods. The deal, which Qualcomm and NXP have said will expire on April 25 without regulatory consent, is crucial for Qualcomm to diversify its business and enter new markets such as automotive and Internet of Things.
Steve Mollenkopf, Qualcomm's chief executive, said in an interview that he was still hopeful that China would greenlight the deal, but he also acknowledged that his company was caught in the trade war. \"That's probably accurate,\" he said.
The irony is that Trump intervened to block Broadcom's takeover of Qualcomm on national security grounds, citing concerns that Broadcom would cut Qualcomm's research and development spending and give an edge to Chinese competitors in developing 5G, the next generation of ultrafast wireless networks.
Now Trump's trade war may end up hurting the company that he sought to shield, as well as undermining US leadership in 5G technology. Qualcomm has been a pioneer in 5G research and development, and has invested heavily in licensing its patents to other companies. If Qualcomm fails to acquire NXP, it may lose ground to rivals such as Intel, Samsung and Huawei in the race to dominate the 5G market.
Qualcomm's predicament illustrates the risks and uncertainties that multinationals face in dealing with China, which is both a huge market and a potential adversary for many US companies. China accounts for about two-thirds of Qualcomm's revenue, and is also home to many of its suppliers and customers.
Qualcomm is not the only US company that has been affected by the trade war. Boeing, Apple, General Motors and many others have also faced pressure from China's tariffs, regulations and consumer boycotts. Some analysts have warned that China may use other tactics to retaliate against US companies, such as delaying approvals, launching investigations or imposing fines.
As the trade war escalates, both sides have shown little sign of backing down. Trump has threatened to impose tariffs on another $100 billion worth of Chinese goods, while China has vowed to fight back \"at any cost\". The prospects for a negotiated settlement remain unclear, as both sides have accused each other of unfair trade practices and intellectual property theft.
For Qualcomm, time is running out. The company has said it will walk away from the NXP deal if it does not get China's approval by April 25. If that happens, Qualcomm will have to pay a $2 billion breakup fee to NXP, and will also face a challenge from activist investors who have been pushing for changes in its board and strategy.
Mollenkopf said he was confident that Qualcomm could thrive without NXP, as it had a strong technology road map and a leading position in 5G. But he also admitted that he had little control over China's decision. \"We can only influence so much,\" he said. aa16f39245