NXP CEO Suggests China Refused to OK Qualcomm Deal in Retaliation for ZTE Ban

It’s an “understatement to say” NXP Semiconductors is “disappointed in the outcome of the regulatory approval process in China” that doomed Qualcomm’s $44 million NXP buy (see 1807250062), said NXP CEO Rick Clemmer on a Thursday earnings call. The combined Qualcomm/NXP would have “represented the true semiconductor industry powerhouse,” he said. NXP’s mission now is not to “dwell on what could have been” but to “focus on what we can do to accelerate and expand our leadership,” said Clemmer. Amid questions about “the level of commitment of the NXP executive management team” now that the Qualcomm deal died 21 months after its inception, “the management team, including Peter and myself, are fully committed to continue to drive the future success of NXP,” said Clemmer, referring to Chief Financial Officer Peter Kelly. NXP took an estimated $31 million hit in Q2 from the Commerce Department’s ban on materials shipments to ZTE that caused disruptions to NXP’s RF power components business “and to a lesser degree our digital networking and other businesses,” said Clemmer. Shipments to ZTE have resumed and will “hopefully continue” as normal for the rest of the year, said Kelly. Clemmer suggested Chinese regulatory authorities refused to approve the Qualcomm buy in retaliation for the ZTE ban because it “was considered to be one of the factors in the discussions with the Chinese relative to the regulatory approval process.” Clemmer finds it quite surprising “that the Chinese made the decision they did, not to actually approve the transaction, given that ZTE was brought back to life” by the Trump administration and Congress, he said. Representatives of China’s Foreign Ministry didn’t comment Friday, nor did Qualcomm, which Thursday blamed the NXP deal's demise on the "geopolitical environment" (see 1807260005).