Shares in semiconductor maker Qualcomm (QCOM) were lower today after China launched an antitrust probe into its acquisition of Autotalks earlier this year.
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Chinese Pressure
China’s State Administration for Market Regulation said the probe would look at whether Qualcomm violated China’s antitrust law by not lawfully declaring some details in its acquisition of the Israeli chip designer.
There were few further details in the statement from the regulator but it is another sign that China is becoming increasingly aggressive towards U.S. tech firms. That’s down to the trade spat between the two countries and the fight to come out on top as the globe’s AI champion.
Qualcomm, which did not comment on the probe, sells its smartphone chips to some of the biggest players in China, such as Xiaomi (XIACF).
It completed the deal for Autotalks back in June. Autotalks specializes in vehicle-to-everything (V2X) communication. V2X technology helps vehicles communicate with each other and with their surroundings, which is important for making roads safer and improving traffic flow.
Qualcomm plans to speed up the rollout of connected and automated driving systems around the world and add to its Snapdragon Digital Chassis lineup, which is already being used by several automakers.
Since the deal, QCOM’s shares have continued to surge higher – see below:
Autotalks also makes computer chips specifically for V2X and was the first to develop a V2X chipset. In addition, its products support all major global communication standards, including DSRC and C-V2X (which covers LTE and 5G technology).
Complex Deal
However, at the time QCOM did not disclose the value of the deal, which did not have the smoothest of paths.
According to Israeli media, Qualcomm paid a cut-price of $80 million to $90 million for Autotalks, well below a price of around $350 million it agreed in an original deal two years ago.
Qualcomm had abandoned that agreement, blaming regulatory scrutiny after it faced probes from the European Commission, U.K.’s Competition and Markets Authority and the U.S. Federal Trade Commission.
The new probe comes in the wake of claims from the Chinese regulator that semiconductor giant Nvidia (NVDA) has violated its antitrust law and the tightening of export controls on rare earths and related technologies.
It also comes ahead of an expected meeting between President Donald Trump and his Chinese counterpart Xi Jinping on the sidelines of the Asia-Pacific Economic Cooperation forum in South Korea in late October.
Is QCOM a Good Stock to Buy Now?
On TipRanks, QCOM has a Moderate Buy consensus based on 10 Buy, 7 Hold and 1 Sell ratings. Its highest price target is $225. QCOM stock’s consensus price target is $181.67, implying a 9.66% upside.
