UPDATED 15:42 EDT / JUNE 09 2017


EU regulators to investigate Qualcomm’s $38B NXP acquisition

Qualcomm Technologies Inc.’s push to enter the automobile processor market may be about to hit its first regulatory roadblock.

Antitrust authorities in the European Union have opened an investigation into the chip maker’s ongoing acquisition of Netherlands-based NXP Semiconductors NV. It’s not too big a surprise given the $38 billion price tag of the deal — $47 billion when debt is added in — and the Dutch firm’s competitive position. NXP is the leading processor supplier to the auto industry, where chip demand is growing rapidly as car makers introduce more connected vehicles with digitized functions.

The EU is worried that Qualcomm might exploit the acquisition to harm the competition and unfairly raise prices. These concerns are based on much more than just the details of the transaction. Over the past few months, several lawsuits have been filed against the Qualcomm over allegations of unfair business practices.

One of the plaintiffs is Apple Inc., which uses Qualcomm’s mobile networking chips in its iPhones and iPads. The mobile giant has sued Qualcomm in multiple jurisdictions for allegedly taking advantage of its dominant position in this segment to charge excessive fees. The lawsuits eventually prompted the U.S. Federal Trade Commission to open a case of its own against the chip maker with the backing of rivals Intel Corp. and Samsung Electronics Co. Ltd.

The legal battle is already starting to take a toll on Qualcomm’s bottom line. Last month, the company warned investors of a multibillion-dollar revenue drop after Apple escalated its campaign by halting royalty payments. 

The EU’s investigation opens a new legal front for Qualcomm that could potentially create yet more challenges. But the chip maker sounded an optimistic tone about the NXP deal following a Reuters report today, saying in a statement that it “continues to expect this transaction to close by the end of 2017.”

Image: Qualcomm

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