Qualcomm announced on July 25 (local time) that it has given up on its plan to acquire NXP Semiconductors of the Netherlands for US$44 billion. The US company is the latest addition to the growing list of corporations falling victim to the ongoing trade war between the US and China.
Qualcomm announced in October 2016 that it would acquire NXP Semiconductors and was planning to complete the process by the end of last year. To close the deal, Qualcomm had to acquire approval from the nine countries involved, including the US, China, South Korea and European countries. Of the nine, only China refused to endorse the deal.
The Chinese government refused to give the green light, saying that the acquisition would have a negative market impact. According to news outlets and experts, however, the real reason was its trade war with the US.
NXP Semiconductors is not the only victim of the trade war. For example, Starbucks is currently facing more and more competition and boycott in China as an increasing number of Chinese consumers are becoming hostile to American companies. Harley-Davidson recently announced that it would relocate some of its manufacturing facilities abroad in order to avoid retaliatory tariffs.
Also, Facebook’s plan to set up a subsidiary company in the Zhejiang Province of China is going nowhere after the Chinese government canceled its approval all of a sudden. GM, Ford and Chrysler recently adjusted downwards their earnings estimates for this year. The Donald Trump administration is planning to provide up to US$12 billion for local farming households that have been affected by the trade disputes.
Still, both the US and China are showing no signs of backing down at all. This means more and more companies are likely to be victimized as time goes by. According to a Chinese government newspaper, the future direction of the war is hardly predictable but one clear thing is that a number of Chinese companies will go under if the US executes its plan to increase the amount of imports from China subject to US tariffs from US$60 billion to US$200 billion and further to US$500 billion.