The Taiwan Fair Trade Commission has given QUALCOMM, Inc. (NASDAQ:QCOM) the green light to complete its NXP Semiconductors NV (NASDAQ:NXPI) acquisition. Taiwan’s go-ahead builds on a similar antitrust clearance by the U.S Federal Trade Commission in April.
Regulatory Approval Stand Off
“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 hyper-connected world,” said the chief executive officer, Steve Mollenkopf.
Qualcomm faces an uphill task to finalize the $38.6 billion transaction. Scrutiny from the European Commission is the latest headwind to plague the proposed merger. The commission is currently probing intellectual property from the two companies as it tries to understand the kind of impact it might have on competition. The European Commission will issue its verdict on the merger in October.
Regulatory approval is not the only hurdle Qualcomm faces as it seeks to finalize the $110 a share deal. NXP shareholders must still approve the deal prior to the two companies merging. A good number of the company’s shareholders are reportedly on the fence waiting for regulators to clear the deal before tendering shares. It has also emerged that an activist investor in NXP is pressuring the company to push for a higher price.
Qualcomm Diversification Plan
QUALCOMM plans to use the NXP Technologies acquisition to expand its business away from smartphones. Rising competition compounded by saturation has made it impossible for the chip giant to scale its operations around smartphones exclusively.
The NXP acquisition should help Qualcomm expand its operations into the auto industry. The chip giant with annual revenues of about $9.5 billion boasts of a strong market share in the development of chips used in automotive applications. The company also develops chips used in mobile payments and credit cards.
Qualcomm stock was down by 0.14% in Thursday’s trading session ending the day at $56.93 a share.