Qualcomm (QCOM  ), a telecommunications equipment producer, recently cancelled plans to acquire its rival NXP Semiconductors (NXPI  ). Plans to buy NXP first occurred in October 2016 at a value of $38 billion, but increased to $44 billion this past February. Qualcomm is well-known producer of microchips used by smartphone companies that produce Android (GOOGL  ) phones and Apple (AAPL  ). Likewise, NXP Semiconductors are known for supplying the automotive industry, and currently boasts 14 of the 15 top products that make up the automotive infotainment systems.

Although Qualcomm is headquartered in America, and NXP in the Netherlands, both companies rely on China for a majority of their production and business. As such, both require approval from local Chinese regulators, who must decide whether the deal can be completed. Despite predictions that both companies will have a revenue of approximately $30 billion together, the manufacturers split due to antitrust approval delays in China. A representative for the Chinese Commerce Ministry recently reported that the severance of the deal was not related to new trade regulations on China imposed by the US.

In the past year, the Trump administration has established tariffs on Chinese goods that are worth $34 billion. In response, China imposed levies upon approximately $12 billion worth of US products. The imposition of tariffs during China's long regulatory approval of the Qualcomm-NXP deal for 20 months, compared to the quicker approval of eight other governments including the United States, has caused many to believe that trade tensions contributed towards the termination of deal between the two companies.

The Trump Administration's support of Qualcomm is not surprising, as President Trump recently blocked rival Broadcom's bid on Qualcomm earlier this year to maintain America's technological advancement and wireless research, according to D.C spokesmen. There is a strong desire of America, as well as China, to fortify national technology companies. In 2015, China demanded Qualcomm to pay a fine of $975 million after Chinese regulators deemed that the company had taken advantage of the market.

The deal between Qualcomm and NXP was proposed to be beneficial for the former, as they could have strengthened their presence into the newer market of automotive chips. Regarding the split, Qualcomm CEO Steve Mollenkopf noted that their "core strategy of driving Qualcomm technologies into higher growth industries remains unchanged [...] We believe our technology leadership and disciplined execution will drive significant value creation for our stockholders."

As a result of the terminated deal, Qualcomm has reportedly agreed to pay $2 billion to NXP Semiconductors. In order to maintain growth, some say that the telecommunications producer may have to find ways to optimize revenue from the growth of 5G networks and the rising smartphone purchases across the globe.