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Steve Mollenkopf, CEO of Qualcomm
Qualcomm slid more than 4 percent Thursday after the company announced layoffs and said it would be withdrawing and refiling a merger application with Chinese authorities regarding a tie-up with Dutch semiconductor company NXP.
Sources tell CNBC that Qualcomm is “very concerned” with the fate of the deal. A Commerce Ministry spokesman said Thursday that the chipmakers would have to do more to resolve competition concerns.
“This deal will have significant influence in the industry and might have a negative impact on competition,” the unnamed spokesman for the agency told Reuters. “Qualcomm’s plan could not easily solve the problems relating to market competition.”
Refiling extends the review period and the tender offer by three months to July 25.
The U.S. chipmaker has already received approval from eight of nine required global regulators to finalize the acquisition, with Chinese clearance the only one pending.
Qualcomm also said Wednesday it had begun laying off employees as a cost-saving measure, confirming at least part of an earlier report from Bloomberg that more than 1,500 employees would be cut.
Qualcomm employed roughly 34,000 people as of September.
The company in January said it would take steps to reduce annual costs by $1 billion, in part to win investors’ support against a hostile takeover bid from rival chipmaker Broadcom.
That deal was ultimately blocked by U.S. officials, in an effort to protect U.S. tech companies from growing Chinese competition.
With Thursday’s dip, Qualcomm is down more than 10 percent in 2018 and and more than 20 percent off its 52-week high of $69.28.
— Reuters and CNBC’s David Faber contributed to this report.
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