China probes Qualcomm's Autotalks deal; shares fall over 4%

China has launched an antitrust investigation into Qualcomm Inc.’s planned acquisition of Autotalks, a move targeting another major US technology firm that comes just before a pivotal meeting between the leaders of the two countries.

The probe had an immediate negative impact on the US chipmaker’s stock.

The State Administration for Market Regulation (SAMR) announced the investigation in a brief statement on Friday, confirming it would look into potential violations of the country’s anti-monopoly law in relation to the transaction, which was first announced in June.

Probe timed ahead of a presidential summit

The investigation into Qualcomm, whose technology is critical for smartphones and networking, is being widely interpreted as a strategic maneuver by Beijing to gain leverage in its complex relationship with Washington.

The move comes in the run-up to talks between US President Donald Trump and his Chinese counterpart, Xi Jinping, as both nations jockey for position ahead of the expiration of a US-China trade truce.
The probe fits into a broader pattern of escalating tensions.

This week, China unveiled new export curbs on rare earths and other critical materials, echoing moves it made in response to previous US tariffs.

This action against Qualcomm also mirrors a similar investigation Chinese regulators announced into Nvidia Corp.’s 2020 acquisition of Mellanox, which was unveiled around the time of other high-level trade negotiations.

Qualcomm shares tumble on the news

The market reaction to the announcement was immediate. Qualcomm’s shares fell more than 4% in pre-market trading in New York, a clear sign of investor concern over the new regulatory hurdle.

The news also had a ripple effect, driving shares in the London-listed Alphawave IP Group Plc down by about 6.5%.

Qualcomm is in the process of acquiring Alphawave in a separate 2.4 billion dollar deal, making its regulatory standing in China a matter of significant concern for investors in that company as well.