Qualcomm-NXP Deal Faces EU Snag

Release time:2017-06-03
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source:EE Times
reading:486


As Qualcomm continues its lonely courtroom battle against the world, the San Diego-based smartphone chip behemoth is fighting for approvals of its proposed NXP acquisition with a global army of antitrust regulators.

After the relatively lenient U.S. antitrust forces cleared the merger without conditions, Qualcomm’s next hurdle is a preliminary review by the EU competition authority, set to conclude on June 9. The EU could approve the deal with or without conditions.

Reuters reported Friday that Qualcomm had until June 1 to propose concessions to allay possible competition concerns about what would be the biggest-ever deal in the semiconductor industry. The company has not done so thus far.

If the EU opens an investigation of any serious concerns, this could delay a resolution by up to four months to the process.

Qualcomm appears to be banking on its ability to convince regulators that the deal is not anti-competitive. If it fails, it might have to offer concessions.

Smartcard chip technology at issue?
The product portfolios of Qualcomm and NXP are deemed largely complementary. Hence it’s not clear what might exactly trigger EU to balk over the merger.  

Reuters, quoting unnamed sources, pointed out, “Rivals had urged the European Commission to ensure they would still be able to use NXP technology known as Mifare once the deal is done.”

Asked why NXP’s smartcard chip technology, controlled by Qualcomm, could be an issue in Europe, Rob Lineback, senior market research analyst at IC Insights, gave EE Times two potential theories.

“The potential rivals could be worried about Qualcomm selling Mifare to a Chinese business as part of its efforts to win approval from China for the acquisition of NXP,” he said. In this case, the premise is that China’s MOFCOM (Ministry of Commerce), increasingly driven by industrial policy, could target the Qualcomm-NXP deal by demanding material divestitures as a condition of clearance.

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Taking its legal battle with chip making giant Qualcomm to the next level, Apple has claimed it wanted to use Qualcomm modems in its 2018's iPhone models but the chip maker refused to sell them after being sued by the iPhone maker over its licensing practices.The US Federal Trade Commission(FTC) has accused Qualcomm of operating a monopoly in wireless chips, forcing companies such as Apple to work with it exclusively and charging excessive licensing fees for its technology.According to Apple Chief Operating Officer Jeff Williams's testimony in court during the FTC trial against Qualcomm, the latter refused to sell its 4G LTE modems to Apple because of the companies' licensing dispute, the CNET reported late on Monday.The chip making giant continues to provide the iPhone maker with chips for its older models, including the iPhone 7 and 7 Plus."The strategy was to dual-source in 2018 as well. We were working toward doing that with Qualcomm but in the end they would not support us or sell us chips," the report quoted William as saying.Apple reportedly dialled Intel's CEO at the time, Brian Krzanich, to ask the company to supply all modems needed for the iPhone instead of only half the volume.However, Williams' comments appear to contradict testimony from Qualcomm's CEO Steven Mollenkopf.Mollenkopf on Friday had said on the stand that as of spring 2018, Qualcomm was still trying to win a contract supplying chips for iPhones but that it hadn't "had any new business" from Apple since its previous contracts expired, the report added.
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Qualcomm has announced its next-generation modem purpose-built for Internet of Things (IoT) applications such as asset trackers, health monitors, security systems, smart city sensors and smart meters, as well as a range of wearable trackers.The Qualcomm 9205 LTE modem has been designed to bring together key innovations required to build cellular-enabled IoT products and services in a single chipset, including global multimode LTE category M1 (eMTC) and NB2 (NB-IoT) as well as 2G/E-GPRS connectivity, application processing, geolocation, hardware-based security, support for cloud services and accompanying developer tools.“The innovations included in the Qualcomm 9205 LTE modem are critical to support many of the 6 billion IoT devices expected to use low-power, wide-area connectivity by 2026,” said Vieri Vanghi, vice president, product management, Qualcomm Europe. “LTE IoT technologies are the foundation of how 5G will help connect the massive IoT, and we are making these technologies available to customers worldwide to help them build innovative solutions that can help transform industries and improve people’s lives.”“The Qualcomm 9205 modem is expanding the IoT ecosystem by providing a solid foundation for future-proof, multimode LTE-M and NB-IoT Cinterion Modules designed to enable worldwide LPWAN connectivity as networks evolve,” said Andreas Haegele, SVP IoT products, Gemalto. “Our security enhancements provide a strong framework for unique Gemalto services such as Device Lifecycle Management that help drive down TCO for device makers and IoT service providers.”
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