US should punish China for killing Qualcomm-NXP merger

The US should punish China for preventing Qualcomm, a premier US chip company, from acquiring NXP, a Dutch company that manufactures a noncompeting line of chips. The merger had been approved by eight other key jurisdictions around the world; China was the only remaining holdout. The Chinese government pretended that it was killing the merger for antitrust reasons. But there was no overlap in the two companies’ product lines, so the Chinese explanation was bogus. The Chinese blocked the Qualcomm acquisition as a way of retaliating against US tariffs against Chinese products.

But President Trump on the personal request of Chinese prime minister Xi Jinping had recently intervened to save China’s ZTE from certain death. ZTE had repeatedly violated sanctions against assisting North Korea. Trump did so over the strong objections of Republicans, who felt that ZTE’s sanction violations were so blatant and repeated that it didn’t deserve a reprieve.

Trump’s personal favor to Xi Jinping on behalf of a Chinese electronics manufacturer that deserved to be punished was thus ill repaid by China’s killing a business transaction of a premier US chips manufacturer that unlike ZTE, had done no wrong.

We think China’s perfidy in this incident should not go unpunished. The previous sanctions levied on ZTE, prior to Trump’s controversial forgiveness, should be reinstated. Let ZTE die by being denied the US chips it needs to remain in business.

If China then wishes to reconsider its blocking the Qualcomm-NXP merger and to compensate the two companies for the damage it did them by blocking the merger, then the US might allow ZTE to survive another day.

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