BREAKING NEWS : Suspect ID as man behind fake social media pages in Delphi investigation Full Story
BREAKING NEWS : Steuben County detectives arrest Fremont man in shooting death of friend Full Story

Do trade wars hurt business? Ask Qualcomm

Plenty of companies have been caught up in President Donald Trump's trade wars. Few have been jerked around more than...

Posted: Jul 25, 2018 6:54 AM
Updated: Jul 25, 2018 6:55 AM

Plenty of companies have been caught up in President Donald Trump's trade wars. Few have been jerked around more than Qualcomm.

On Wednesday, the San Diego-based chipmaker will have to abandon its $44 billion acquisition of the Netherlands' NXP Semiconductors if it fails to gain approval from regulators in Beijing. The deal, first announced more than 20 months ago, has been held up by the Chinese government for months amid the trade fight with the United States.

China could pull through and greenlight the merger at the last minute. But the situation is uncertain at best.

"If I were to lean one way or the other, I would lean toward no deal," said Susquehanna International Group analyst Christopher Rolland, who tracks semiconductor companies.

If the deal doesn't go through, Qualcomm will have to pay NXP a $2 billion termination fee.

Qualcomm has been caught up in the president's trade fights before.

In March, Trump blocked Broadcom's $117 billion bid for Qualcomm over national security concerns, an extraordinary move. The Trump administration is also considering tariffs on semiconductors imported from China. A trade organization that represents Qualcomm says that would hurt member companies.

The trade war whiplash has exacerbated Qualcomm's recent struggles. The company makes most of its money licensing smartphone radios and chips, but two of its biggest customers, Apple and Huawei, are fighting Qualcomm over royalty payments. Apple could also move to use Intel chips - and not Qualcomm chips - in its new iPhones this year.

Meanwhile, Qualcomm has faced regulatory scrutiny all around the world. The European Union fined it $1.2 billion in January for antitrust violations, three years after China fined it nearly $1 billion for an antitrust issue.

"It's just been one thing after another," said Stacy Rasgon, a chip analyst at Bernstein.

Qualcomm declined to comment Tuesday.

Related: Google and Facebook could be caught in the US-China trade war

Qualcomm announced its merger with NXP in October 2016, hoping the deal would allow it to expand into new businesses. Qualcomm focuses on smartphone chips, and NXP has expertise in microchip security and chips for cars.

Since then, the market has shifted. Demand for chips has been solid, and NXP's earnings haven't been as strong as expected, Rolland said.

This could cushion the blow for Qualcomm if the deal falls through. Qualcomm has also said it'll pursue a stock buyback if it can't buy NXP, which would appease many investors.

There's still time. According to the agreement between the two companies, Qualcomm has until 11:59 p.m. ET Wednesday to get approval from Chinese regulators. It's the last endorsement the companies need to complete the deal.

Qualcomm CEO Steve Mollenkopf told The New York Times last week that the company won't seek an extension past Wednesday, when the company reports earnings.

In China, the call now rests with political leaders, according to Paul Triolo, who specializes in global technology policy at Eurasia Group. He sees "very little upside and tremendous potential for downside" if Beijing doesn't give its OK. Triolo expects the deal to be approved.

He noted that even though the United States has eased penalties on Chinese phone and telecom equipment maker ZTE, the US government still holds tremendous power over the company. The Chinese government won't want to put ZTE in danger again, he said.

Related: ZTE can once again do business with American companies

Triolo predicted the decision will come down to the wire.

In recent months, US tensions with China have repeatedly roped in Qualcomm.

Besides the Broadcom deal, which was scuttled after US officials raised concerns that it would give China an edge on 5G technology, Qualcomm faces complications from potential American tariffs on chips imported from China.

On Tuesday, the Semiconductor Industry Association, of which Qualcomm is a member, made its case against the possible tariffs at a hearing in Washington.

US companies often send mostly finished chips to China for assembly, testing and packaging. They could then face tariffs when these chips are shipped back in to the country.

Indiana Coronavirus Cases

Data is updated nightly.

Cases: 1130719

Reported Deaths: 17736
CountyCasesDeaths
Marion1468762242
Lake732391255
Allen68004883
Hamilton51739488
St. Joseph50459650
Elkhart40619547
Vanderburgh34963497
Tippecanoe31212276
Johnson27963467
Hendricks26585385
Porter25969387
Madison21318457
Clark20392279
Vigo19244309
LaPorte17405261
Delaware17004303
Howard16942315
Monroe16794220
Kosciusko14447167
Hancock13259186
Bartholomew13180191
Warrick12320190
Wayne12200269
Grant12181247
Floyd12096226
Morgan10552192
Boone9966124
Noble9429123
Marshall9295147
Henry9268169
Dearborn9053100
Dubois8877140
Shelby8402130
Cass8241128
Lawrence8134185
DeKalb7933109
Jackson779993
Huntington7761116
Montgomery7213123
Gibson7179118
Harrison7031100
Knox6958116
Steuben676589
Miami6675114
Whitley667260
Putnam651286
Clinton633179
Wabash6323111
Jasper622192
Jefferson5946105
Ripley565994
Adams547981
Daviess5124118
Scott498980
Wells4894106
White486069
Greene4749101
Clay468662
Decatur4659110
Fayette462597
Jennings457167
LaGrange432291
Posey412944
Randolph4010107
Washington393656
Fountain382264
Fulton368374
Spencer365147
Starke361474
Owen358577
Sullivan351155
Jay336450
Orange335272
Rush314833
Carroll301639
Franklin295244
Perry292853
Vermillion285958
Tipton253367
Parke251630
Pike251244
Blackford224944
Pulaski213759
Newton185052
Brown179750
Benton171717
Crawford170729
Martin152619
Switzerland149412
Warren137816
Union125116
Ohio92913
Unassigned0599

Ohio Coronavirus Cases

Data is updated nightly.

Cases: 1735925

Reported Deaths: 26851
CountyCasesDeaths
Franklin1807941843
Cuyahoga1705042655
Hamilton1146441544
Montgomery811601405
Summit728891210
Lucas637861027
Butler57319814
Stark544971183
Lorain42941645
Warren36238417
Mahoning36168788
Lake32818501
Clermont31601369
Trumbull27766620
Delaware27462185
Licking26929344
Medina26408353
Fairfield24875287
Greene24585373
Clark22391390
Portage21591283
Richland21339342
Wood20348248
Allen19172326
Miami17486352
Columbiana17078335
Muskingum16882207
Wayne15914307
Tuscarawas14631362
Marion13477196
Ashtabula12980237
Erie12832199
Scioto12586188
Pickaway12326155
Ross11824226
Hancock11659175
Geauga11090179
Lawrence10729172
Belmont10548234
Huron9891159
Jefferson9724228
Union966575
Sandusky9465166
Seneca9020161
Knox8893176
Washington8738159
Darke8446181
Athens842897
Ashland8130152
Auglaize8042120
Shelby7575135
Defiance7431117
Crawford7376150
Fulton7284113
Brown7225116
Logan7087111
Guernsey701786
Mercer6964100
Highland6822120
Clinton6554106
Williams655299
Madison653990
Preble6343140
Putnam6300122
Jackson586597
Champaign586187
Perry571279
Coshocton5700108
Ottawa5696102
Morrow524665
Fayette499072
Hardin4960100
Gallia475878
Van Wert470895
Pike468478
Adams4638110
Henry440380
Hocking414293
Holmes4044141
Wyandot379975
Carroll373678
Paulding327551
Meigs307961
Monroe237261
Noble221949
Morgan219439
Harrison216953
Vinton189738
Unassigned06
Fort Wayne
Partly Cloudy
23° wxIcon
Hi: 24° Lo: 17°
Feels Like: 16°
Angola
Mostly Cloudy
21° wxIcon
Hi: 24° Lo: 17°
Feels Like: 15°
Huntington
Partly Cloudy
22° wxIcon
Hi: 23° Lo: 16°
Feels Like: 22°
Decatur
Partly Cloudy
23° wxIcon
Hi: 25° Lo: 17°
Feels Like: 16°
Van Wert
Partly Cloudy
24° wxIcon
Hi: 25° Lo: 18°
Feels Like: 18°
After a cold start to the week, warmer air begins to filter back into the region Wednesday.
WFFT Radar
WFFT Temperatures
WFFT National

Community Events