China: Qualcomm failed to resolve anti-monopoly worries

In this April 27, 2017, photo, a staff member talks with a visitor at a display booth for Qualcomm at the Global Mobile Internet Conference (GMIC) in Beijing. China's government said Friday, July 27, 2018, that tech giant Qualcomm Inc. failed to resolve anti-monopoly regulators' concerns about its proposed takeover of NXP Semiconductors in a case seen as a possible victim of U.S.-Chinese trade tensions. (AP Photo/Mark Schiefelbein)

BEIJING — Qualcomm Inc. failed to resolve China's anti-monopoly concerns about its proposed acquisition of NXP Semiconductors, the government said Friday, in a case analysts warned would worsen escalating U.S.-Chinese tensions over technology.

The State Administration for Market Regulation's announcement followed a government denial Thursday that a lengthy anti-monopoly review, which prompted Qualcomm to drop its bid this week, was linked to Beijing's tariff dispute with Washington.

Qualcomm's plan for the $44 billion acquisition "cannot resolve competition concerns," the regulator said on its website. It gave no details.

The delay following U.S. and European approval prompted suggestions Beijing might be using the case as leverage in its spiraling dispute with Washington.

Beijing's failure to approve the deal "will escalate trade tensions between the two countries," Eurasia Group said in a report.

Qualcomm had described the bid for NXP, announced in 2016, as a way to expand into markets for automobiles, security and network processing. That would have created an even bigger global competitor to a fledgling Chinese semiconductor industry communist leaders are spending billions of dollars to develop.

The deal "had been held hostage" to U.S.-Chinese trade tensions and Washington's decision on whether to rescind a ban on sales of U.S. technology to telecoms equipment maker ZTE Corp., Eurasia Group said.

ZTE was accused of reneging on a settlement over violations of U.S. rules on exports to Iran and North Korea. American regulators lifted the sales ban July 13, but Eurasia Group said that might be in jeopardy.

Qualcomm, headquartered in San Diego, applied for the anti-monopoly review before Beijing's dispute with U.S. President Donald Trump over complaints China steals or forces foreign companies to hand over technology blew up.

The company withdrew its application in April and submitted a new version after the Commerce Ministry said it faced unspecified difficulties satisfying concerns it might harm competition.

On July 6, the Trump administration raised import duties on $34 billion of Chinese medical technology and other goods it said benefit from improper government support. Beijing retaliated by raising its own tariffs on the same amount of U.S. imports.

Qualcomm dropped the bid for NXP on Wednesday when its agreement expired without Chinese approval.

A Commerce Ministry spokesman, Gao Feng, said Thursday the case "has nothing to do with" the U.S.-Chinese dispute.

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