Tencent Technology News, according to foreign reports, sources revealed on Wednesday, before approving Qualcomm's acquisition of NXP's transactions, Chinese regulators are seeking to obtain more protective measures for Chinese companies, which will damage Qualcomm as an independent company. Survival strategy.
It is reported that the Chinese Ministry of Commerce is currently dissatisfied with the solution proposed by Qualcomm, and the latter put forward more requests. Many Chinese companies are currently lobbying the Ministry of Commerce, saying that Qualcomm's acquisition of NXP's transactions will hurt their business and should stop the transaction. Chinese companies are currently particularly concerned that Qualcomm’s patent licensing business will enter the field of mobile payment and driverless systems after the transaction is completed.
As the world’s largest semiconductor importer, China is seeking to build a world-class chip industry and further reduce its dependence on foreign technology. Earlier reports said that the second phase of the National IC Industrial Investment Fund has started. The fund will raise up to 31.5 billion U.S. dollars to invest in Chinese chip companies. Up to now, the spokesman of Qualcomm and the Ministry of Commerce have not commented on this.
After defeating Broadcom’s hostile takeover bid, the completion of the acquisition of NXP’s transaction as soon as possible is critical to Qualcomm’s independent plan, as Qualcomm’s management must fulfill its commitment to shareholders to improve their performance and expand their business. The acquisition of NXP's transaction is critical to Qualcomm because it can ease Qualcomm’s reliance on the slowing smartphone market.
Qualcomm announced in October last year that it will acquire NXP for US$110 per share in cash. The transaction amounted to approximately US$47 billion. This price includes NXP’s debt. This transaction will be the largest transaction in the semiconductor industry. It will also help Qualcomm expand its chip business from mobile phones to the automotive industry. More importantly, this transaction may also make Qualcomm the largest in the automotive chip industry. The supplier. Qualcomm announced in February this year that it has reached an agreement with NXP to increase the offer from US$110 per share to US$127.50 per share. After the adjustment, the total amount of the purchase transaction will increase from approximately 38 billion U.S. dollars to approximately 44 billion U.S. dollars.
NXP invested USD 11.8 billion in the acquisition of Freescale in 2015, which made it one of the larger chip manufacturers in the industry. At present, NXP owns seven factories in five countries and regions. These factories can convert silicon wafers into chips. In addition to these plants, NXP also operates a 7-seat packaging and test chip infrastructure. NXP is currently the world's largest automotive chip supplier, providing services to more than 25,000 customers through direct sales channels and distributor networks.
NXP’s position in the fast-growing chip market is an important driver of this transaction. Industry analysts believe that the reason is mainly because Qualcomm wants to provide chips for driverless cars. After the merger, the company’s annual revenue is expected to reach more than US$30 billion; two years after the completion of the transaction, the combined new company can save US$500 million in annual expenditure. This transaction will recreate Qualcomm, promote the company to further develop its chip manufacturing business, and expand Qualcomm’s product line beyond mobile devices, while also reducing Qualcomm’s dependence on the smartphone market.
"For Qualcomm, the most pressing issue in the short term is the completion of the acquisition of NXP transactions," said Raymond James & Co. analyst Chris Caso in the research report. "If the acquisition of NXP's transaction is blocked by the Chinese Ministry of Commerce, Qualcomm's share price may fall. ”
Investors who are currently betting on NXP transactions are closely watching the movement of the Chinese Ministry of Commerce. Qualcomm is currently a unique company in the semiconductor industry because most of the company’s profits come from patent licensing operations. In 2015, Qualcomm paid a fine in China and agreed to reduce the cost of Chinese companies using Qualcomm patents, thus retaining the right to open patent licensing business in the Chinese market.