Europe pokes its nose into Qualcomm’s $47bn NXP purchase

Moving at the breakneck speed which we have all learned to endure, the European Commission has decided to put Qualcomm’s $47 billion acquisition of NXP under the microscope.

The initial move was announced back in October, seeming a play from Qualcomm to become a bigger player in the IoT and NFC segments, though we have been scratching our heads, trying to figure out what the European Commission (hereafter known as the Gaggle of Red-tapers) has been doing for the past six months.

“We use our electronic devices every day – mobile phones or tablets,” said Chief Gaggler for competition Margrethe Vestager. “As semiconductors are used in practically every electronic device, we are dependent on them in those devices. With this investigation, we want to ensure that consumers will continue to benefit from secure and innovative products at competitive prices.”

The concern here is two such large players combining to form an industry mega-brand. Although Qualcomm and NXP technically operate in different hemispheres of the semiconductor world, Qualcomm develops and supplies baseband chipsets enabling cellular telco standards such as UMTS and LTE, while NXP has made its name in near-field communication (NFC) chips and secure elements (SE), competition eyebrows have been raised. The specifics of the concerns are as follows:

  • The Gaggle believes combining powers would allow Qualcomm/NXP to offer bundles which mean competitors would struggle to compete on pricing
  • Royalties might go up should the Qualcomm/NXP patent portfolios be merged
  • The automotive industry in particular would be under risk of being anti-competitive

There is a sense of ‘no-sh*t Sherlock’ about the whole saga. Why else would Qualcomm fork out $47 billion if not position itself as a major player in high-growth segments? Why does the Gaggle seem surprised that a bundling strategy to make the products more prise competitive is an objective? Surely this is what drives a strong proportion of acquisitions, especially in the telco space?

Qualcomm will surely be holding its breath as the sticky fingers of the Gaggle of Red-tapers pokes and prods at the deal, in what appears to be a continuous campaign to justify its bloated and boresome existence. The world is slowly beginning to show analogue regulators for what they truly are; dated and anti-intuitive.

The Gaggle itself does have the right to investigate the deal, though one should ask what took them so long. It’s not like this was a deal which was snuck through. As it should be, an acquisition which talks about $47 billion was big news. Why weren’t these concerns raised six months ago?

To a certain degree, it could be seen as irresponsible from the Gaggle. The slow pace of movement and change will leave uncertainty in the minds of the companies involved in any acquisition. How can they go about their daily lives efficiently when there is the prospect of a major investigation down the line? It might never come, or it might scupper your plans completely. How can you begin to integrate the two companies or remain competitive in an incredibly fast-paced industry when this element of doubt is always lurking.

The telco and technology industry is beginning to hit its dominant stride again. But this is mainly in spite of the boresome bureaucrats, nowhere near because of it.

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