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Qualcomm says it will drop US$43b bid for Dutch chip rival NXP
[WASHINGTON] US computer chip giant Qualcomm said Wednesday it was set to drop a US$43 billion acquisition of Dutch rival NXP after failing to win approval of antitrust authorities in China.
Qualcomm's chief executive Steve Mollenkopf said the California firm would end its effort when the bid expires at 11.59pm Eastern time (0359 GMT) barring any "new material developments."
The move comes amid increasing trade tensions between the United States and China.
Qualcomm had extended the deadline several times for the tie-up which would have given the dominant smartphone chipmaker firm a broader array of products including sensors and microprocessors for connected "internet of things" devices.
It also raised its bid - from US$110 to US$127 a share - in February, to the irritation of fellow chipmaker Broadcom, which itself recently had a hostile bid for Qualcomm blocked by the White House.
Washington said the acquisition of Qualcomm by Broadcom - now Singapore-based - would help Chinese competitors such as Huawei, particularly in the emerging 5G blazing fast wireless internet, where a stronger China could present a national security issue.
According to Qualcomm, the acquisition of NXP has received antitrust clearance from eight of the nine required government regulatory bodies around the world, with the matter still pending in China - suggesting the takeover may be a collateral victim of US-China trade tensions.
"We intend to terminate our purchase agreement to acquire NXP when the agreement expires at the end of the day today, pending any new material developments," Mr Mollenkopf said in a statement with the company's quarterly earnings.
"In addition, as previously indicated, upon termination of the agreement, we intend to pursue a stock repurchase program of up to US$30 billion to deliver significant value to our stockholders."
The company also said it expected to pay NXP a US$2 billion breakup fee.
Based in the Dutch town of Eindhoven, NXP is a leading maker of chips for the auto industry, as well as for contactless payment systems.
A former division of the Dutch electronics giant Philips, it became independent in 2006.
Qualcomm said profit rose 41 per cent from a year ago to US$1.2 billion while revenues edged up four percent to US$5.6 billion.