Confirmed that Qualcomm's acquisition of NXP will be approved by the EU

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Brussels will approve Qualcomm's $47 billion takeover of Dutch chipmaker NXP next week, the Financial Times reported, marking the completion of the chip industry's largest merger and acquisition deal after the US company fended off a hostile takeover by rival Broadcom.

Europe’s antitrust regulator is expected to make a clear statement on the deal after both parties expressed concerns that the merger could increase costs or exclude competitors, two people familiar with the matter said.

Last June, the European Commission was concerned that the merger might harm competition and launched an in-depth investigation.

“Since semiconductors are used in virtually all electronic devices, we rely on them," EU Competition Commissioner Margrethe Vestager said at the time. "Using this investigation, we will ensure that consumers continue to benefit from safe, innovative and competitively priced products.”

The EU believes the merged entity will exclude competitors and increase patent royalties. They are also concerned about the two companies bundling Qualcomm's "baseband" wireless processors with NXP's "near field communication" chips (NFC) and "security elements" for wireless mobile payment systems.

Qualcomm has previously said NXP could offer complementary assets, particularly NFC and chips for the "internet of things."

The company promises to obtain approvals for licenses, intellectual property and system elements.

The move by Brussels could also bolster Qualcomm against Broadcom, which launched a campaign late last year to acquire the U.S. chipmaker. NXP will be part of the bid, which will face stricter regulation because both the Dutch company and Broadcom have WiFi chip businesses.

The European Commission and Qualcomm declined to comment.

Qualcomm is embroiled in a series of corporate and legal disputes, including allegations of anti-competitive behavior by Apple, one of its largest customers, and an EU investigation into two of the company's pricing policies.

In recent years, the company has also received antitrust fines in China, South Korea and Taiwan due to patent issues.

Despite regulatory woes, Qualcomm is seeking to keep its business afloat while diversifying its revenue beyond smartphones. Last month, while navigating legal battles, the company launched its Snapdragon 845 processor, a next-generation chip that will offer artificial intelligence capabilities and mark Qualcomm's entry into emerging fields such as virtual and augmented reality.

In recent years, Qualcomm's determination to enter the automotive electronics field has been stronger than ever before. After the completion of this transaction, Qualcomm finally felt reassured.

After the acquisition of NXP is successful, Qualcomm's product line will be reshaped. In 2015, NXP acquired Freescale for $11.8 billion and became the world's largest automotive semiconductor supplier. If NXP's strength in the field of automotive electronics is combined with Qualcomm's technology in communication chips and system design, it is expected to integrate a better product line.

NXP's product line tends to be applied to various vertical industries, which is exactly what Qualcomm lacks in terms of product strategy. For example, everyone is talking about the Internet of Vehicles, and in the future, how many products on the market will use Qualcomm and NXP's solutions? It is not difficult to see why this acquisition was made.

In addition to automotive electronics, NXP also has a wide range of product lines. According to the display at the "NXP FTF 2016" held recently, NXP's business scope covers industries such as automobiles, security chips, radio frequency, Internet of Things and mobile payments. Due to the strong complementarity of the two companies' product lines, mergers and acquisitions can greatly boost profitability. There have been rumors in the industry that Qualcomm will acquire NXP. The investment report released by investment company Sanford C. Bernstein mentioned the possibility of Qualcomm acquiring NXP. According to Reisgen's estimate, the acquisition of NXP can increase Qualcomm's profits by 30%, not counting the costs that can be saved after the acquisition.

It will take some time before we see the new Qualcomm giant.

Qualcomm set to win EU approval for $47bn deal for NXP

Brussels is set to approve Qualcomm’s $47bn takeover of NXP next week, greenlighting the chip industry’s largest deal and strengthening the US company’s defence against a hostile takeover bid by rival Broadcom.

European antitrust regulators are expected to clear the acquisition after the two companies addressed concerns the combined group would increase costs or exclude rivals, said two people familiar with the case.

The European Commission last June expressed concerns that the tie-up might harm competition and opened an in-depth investigation into the takeover.

“As semiconductors are used in practically every electronic device, we are dependent on them,” Margrethe Vestager, EU competition commissioner, said at the time. “With this investigation, we want to ensure that consumers will continue to benefit from secure and innovative products at competitive prices.”

The EU believed that the combined entity could exclude rival suppliers and increase royalties. It was also anxious that the companies could bundle Qualcomm’s “baseband” wireless processors with NXP’s “near field communication” chips (NFC) and “secure elements”, which together are used in wireless mobile payment systems.

Qualcomm has previously said NXP provides complementary assets, specifically in NFC and chips used in the ‘internet of things’.

The company’s commitments to win approval include assurances over licences, intellectual property and system elements.

Brussels’ move could also bolster Qualcomm’s battle against Broadcom, which launched a campaign to buy the US chipmaker late last year. That bid would face greater regulatory scrutiny with NXP involved, as the Dutch company and Broadcom both have WiFi chip businesses.

The Commission and Qualcomm both declined to comment.

Qualcomm is embroiled in a number of corporate and legal battles. These include a fighting allegations of anti-competitive behaviour from Apple, one of its largest customers, as well as two EU investigations into historical pricing policies.

The company has also been hit by antitrust fines over licensing fees in China, South Korea and Taiwan in recent years.

Despite its regulatory woes, Qualcomm is seeking to maintain a business-as-usual approach as it seeks to diversify its revenues beyond smartphones. It launched the Snapdragon 845 processor, its next generation chip that will offer artificial intelligence capabilities, last month despite its legal battles as it looks to new sectors such as virtual and augmented reality.

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