Qualcomm CEO Steve Mollenkopf – who along with NXP had agreed a July 25 deadline for Chinese approval – announced his imminent intent to give up on the deal on an earnings call with analysts late Wednesday.
“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… The decision for us to move forward without NXP was a difficult one.”
He added: “Continued uncertainty overhanging such a large acquisition introduces heightened risk. We weighed that risk against the likelihood of a change in the current geopolitical environment, which we didn’t believe was a high probability outcome in the near future.”
Buying $30 Billion of stock Instead
Qualcomm intends to buy back $30 billion of stock instead.
Its team had estimated synergies worth $500 million could be achieved within two years by the combined $32 billion revenue company.
President Trump in March blocked a planned $117 billion (£84 billion) takeover of Qualcomm by Singapore’s Broadcom – which has Chinese ties – and the company has become caught up in growing trade tensions between the two sides.
Qualcomm Dispute with Apple Continues
Qualcomm’s royalties battle with Apple continues meanwhile, costing the company $140 million in legal costs in Q3 as patent cases continue in the US, China and Germany. Qualcomm said new iPhones will drop Qualcomm components as a result and “solely use our competitors’ modems rather than our modems in its next iPhone release,” CFO George Davis said.
“We will continue to provide modems for Apple legacy devices.”
Qualcomm earlier this week had flaggedspeed tests for its Snapdragon 845 chip as proving its products are superior than Intel’s, perhaps in an attempt to take the sting out of the announcement today about Apple.
The company said it is continuing to position itself strongly in the connected cars, IoT and 5G sectors. Its sales grew 4 year-on-year for the quarter to $5.6 billion.
This article is from the CBROnline archive: some formatting and images may not be present.
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