Americans have for years been suspicious of Chinese tech companies. They’ve hesitated to share knowledge with them, and often steered clear of partnerships where they’d be exchanging proprietary information. But recent deals, including China’s rejection of California-based Nvidia’s $40 billion bid to join forces with Softbank-owned British semiconductor firm ARM, shows that the Chinese can be just as suspicious of U.S. motives.
Despite their interdependence, China has been tech decoupling from the U.S for years by running out the clock on regulatory procedures until it’s too late for American tech companies, as it internally tries to “de-Americanise” its supply chain. In May 2015, China announced its Made-in-China plan to reduce dependence on American tech and become a global leader in technological innovation.
“China is not afraid to throw its weight around in terms of trying to bring some of these corporations closer into line with its regulations,” Greg Austin, a senior fellow for cyber, space and future conflict at the International Institute for Strategic Studies, tells Forbes.
Here are some recent tech deals that were either jilted altogether or significantly delayed because Chinese regulators stalled on approval, effectively blocking the deals from going through.
Qualcomm’s Failed Purchase Of NXP
American semiconductor giant Qualcomm abandoned a $44 billion deal to acquire Dutch semiconductor company NXP in 2018 after nearly two years waiting for Chinese regulators to approve. China accounts for two-thirds of Qualcomm’s revenue, giving the country’s regulators power over whether the San Diego-based chip manufacturer could close the deal. Blocking the NXP acquisition knee-capped Qualcomm’s growth, giving China more space to build its own semiconductor industry. Qualcomm paid a $2 billion termination fee to NXP.
TikTok Won’t Be Bought
China said it would rather see TikTok shut down before it acquiesced to the “forced sale” of the video sharing platform to a U.S. company, Reuters reported in 2020. Calling the app a U.S. security risk, the Trump administration threatened to ban TikTok if its Beijing-headquartered parent company, ByteDance, didn’t sell the app to a U.S.-based entity. Microsoft and Oracle both expressed buyer interest, with at least four different deal structures discussed. In 2021, the Biden administration revoked Trump’s TikTok ban and assigned an investigation on whether the app was actually a threat to U.S. security.
Grindr Bows Out Of The Olympics
Grindr, a location-based mobile dating app for the LGBTQ+ community and with 13 million monthly users, removed itself from China app stores earlier this year in the wake of the country’s clean-up effort leading up to the Beijing 2022 Winter Olympic Games. Grindr claimed inability to comply with China’s increasingly stringent rules on storing personal data, similar to Microsoft’s decision to pull LinkedIn from the country’s app stores last year. Other social networking apps, including Facebook, Instagram, Twitter and WhatsApp, have long been blocked in China, several in a long list of companies the country deems not of interest to the state
Hefty Fines For U.S. Mergers And Acquisitions
In July, 2021, the Cyberspace Administration of China threatened to impose heavy fines and penalties on Chinese ride-hailing app Didi after its initial public offering in the U.S . Beijing cracked down on other Chinese tech companies enlisted in the U.S. including Alibaba Holding Group, which was fined $2.8 billion, and Tencent Holdings.
Cisco System’s Merger With Acacia Communications
Cisco System’s 2019 plans to merge with Massachusetts-based Acacia Communications for $2.6 billion were stalled due to lack of approval by Chinese regulators, costing Cisco $1.9 billion. China cleared the deal last year and Acacia was able to renegotiate for a higher purchase price of $4.5 billion.
Applied Materials Purchase Of Kokusai Electric
In March 2021, American chip making equipment supplier Applied Materials walked away from a $3.5 billion deal to buy Japanese Kokusai Electric after two years waiting for approval from China. As a result of the letdown, Applied Materials paid a termination fee of $154 million.