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How NXP Semiconductors NV Shares Fell 10.3% Last Month

By Anders Bylund - May 11, 2018 at 2:46PM

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The Dutch chipmaker has become a pawn in political games between D.C. and Beijing.

What happened

Shares of NXP Semiconductors (NXPI -2.92%) fell 10.3% lower in April 2018, according to data from S&P Global Market Intelligence. That's arguably an impressive move for a stock with a firm all-cash buyout offer on the table and just awaiting one last regulatory approval, but that's where the leader in automotive computing chips stands today.

So what

Netherlands-based NXP's merger with American chip giant Qualcomm (QCOM 3.48%) just needs one last thumbs-up from Chinese regulators before the deal closes. The companies had to resubmit that application for approval because the original request ran into a deadline that sounded more than achievable when the original announcement was made in October 2016. But the business combination has become a pawn in international politics as the Trump administration is saber-rattling toward Beijing, on the edge of starting a full-blown trade war.

Businessman scratches his head over two white chalk arrows on the wall ahead, pointing in opposite directions.

Image source: Getty Images.

Now what

If China nixes Qualcomm's game-changing deal for no other reason than scoring political points, it wouldn't be the first big-name casualty of these disputes. Smartphone and networking equipment giant ZTE recently closed up shop entirely, for example, due to a seven-year ban on buying American-made technologies such as Qualcomm's networking chips. So leaving NXP alone at the altar would not seem like a crazy outcome anymore.

NXP's share prices trend downward every time China and Trump make another move toward an all-out trade war, and there has been plenty of that lately.

If those moves stop someday soon, the merger would probably get rubber-stamped in a hurry, and NXP shares would suddenly catch up with Qualcomm's $127.50 buyout price per stub. But that's a big "if" at the moment.

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Stocks Mentioned

NXP Semiconductors N.V. Stock Quote
NXP Semiconductors N.V.
$154.22 (-2.92%) $-4.64
QUALCOMM Incorporated Stock Quote
QUALCOMM Incorporated
$131.60 (3.48%) $4.42

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