Qualcomm purchase of NXP passes Taiwan hurdle

16/06/17

Qualcomm has announced that the Taiwan Fair Trade Commission (TFTC) has given regulatory clearance to the pending acquisition by Qualcomm River Holdings, an indirect wholly owned subsidiary of Qualcomm, of NXP Semiconductors.

The TFTC clearance includes a finding that the main competitors and counterparties of Qualcomm and NXP “all compete globally with their own global supply chains and have no difficulty in providing their products/technology on a worldwide basis”, and that “after the closing of the proposed transaction, the impact on the market structure is limited while there are still many strong suppliers to compete with each other”. This ruling follows similar antitrust clearance of the transaction by the US Federal Trade Commission in April 2017.

“We are making good progress in obtaining the needed clearance from regulatory authorities in the relevant jurisdictions, and believe that we continue to be on track to conclude the acquisition by the end of 2017,” says Steve Mollenkopf, chief executive officer, Qualcomm Incorporated. "This acquisition is complementary, and driven by the belief that the combined efforts of the two companies will produce even greater innovation than they would alone. This significant investment by Qualcomm will help our industry partners in the automotive, IoT and security sectors advance their transformation to the emerging hyperconnected world.”  

Although progress has been made in Taiwan and the US, the European Commission has opened an in-depth investigation to assess the proposed acquisition under the EU Merger Regulation. The EC has concerns that it could lead to higher prices, less choice and reduced innovation in the semiconductor industry.

In a press statement, Commissioner Margrethe Vestager, in charge of competition policy, said: “We use our electronic devices every day – mobile phones or tablets. As semiconductors are used in practically every electronic device, we are dependent on them in those devices. With this investigation, we want to ensure that consumers will continue to benefit from secure and innovative products at competitive prices."

The EC's initial market investigation raised several issues relating in particular to semiconductors used in mobile devices such as smartphones and in the automotive industry. It says it is concerned that, following the transaction:

  • The merged entity would hold strong market positions within both baseband chipsets and NFC/SEs chips, and would have the ability and incentive to exclude its rival suppliers from these markets through practices such as bundling or tying.
  • The merged entity would have the ability and incentive to modify NXP's current intellectual property licensing practices, in particular in relation to NFC technology, including by bundling the acquired NFC intellectual property to Qualcomm's patent portfolio. The EC will investigate whether such conduct could lead to anticompetitive effects, such as increased royalties for customers and/or exclusion of competitors.
  • The merger would remove competition between companies active in the markets for semiconductors used in the automotive sector and, in particular, in the emerging Vehicle-to-Everything (V2X) technology, which will play an important role in the future development of connected cars.

The transaction was notified to the EC on 28 April 2017. It now has 90 working days, until 17 October 2017, to make a decision.

 

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Qualcomm purchase of NXP passes Taiwan hurdle
Qualcomm purchase of NXP passes Taiwan hurdle

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