A Qualcomm sign is pictured at one of its many campus buildings in San Diego, California. File photo: REUTERS/MIKE BLAKE/FILE PHOTO
A Qualcomm sign is pictured at one of its many campus buildings in San Diego, California. File photo: REUTERS/MIKE BLAKE/FILE PHOTO

For a brief moment in the depths of the European night, it looked like NXP Semiconductors’s stint as a political bargaining chip was finally over. It could only dream.

Chinese regulators were set to approve the Dutch chip maker’s $43bn takeover by Qualcomm, according to the South China Morning Post. NXP jumped as much as 12% in after-hours trading, peaking just $2 short of the $127.50 offer price.

A mere 45 minutes later, Bloomberg News reported that US President Donald Trump had approved tariffs on about $50bn of Chinese goods, including technology products. NXP shares erased most of their gains on concern its deal will be blocked in retribution.

The combination is designed to create a connected car powerhouse, combining the Dutch company’s automotive power management strength with the US giant’s dominance in communications technology.

But the takeover had become a political football after the Trump administration penalised Chinese telecoms equipment maker ZTE for breaking a 2017 sanctions settlement. Chinese regulators responded by shelving their review of the Qualcomm-NXP deal. Trump, in turn, rowed back on the penalties for ZTE, and China promptly restarted the NXP review.

NXP’s usefulness as a bargaining chip is, however, rapidly expiring. The company has set a July 25 deadline for the deal to close. Given the concessions the US made on ZTE, clearing the NXP deal would give China some political goodwill in Washington.

Should the deal fail to come together in time, Qualcomm will pay NXP a $2bn break-up fee. If NXP uses that money to buy back shares, it could add as much as 60c to its $2.63 trailing 12 month earnings per share, according to Rajvindra Gill, an analyst at Needham.

This will be little consolation for the Dutch company’s shareholders, who have seen the value of their stock gyrate in line with likelihood with the deal going ahead.

For Qualcomm’s managers, there have been moments this year when Trump has stepped in to help — not least by blocking an unsolicited takeover attempt by Broadcom. This is not one of them.

Bloomberg