Applied Materials’ plan to acquire Kokusai Electric has effectively collapsed as the company failed to secure approval from the Chinese government by March 19.
The US company will now likely have to pay a termination fee to KKR, the owner of Kukusai.
Applied Materials had signed the contract to buy Kokusai for US$3.5 billion in July last year.
The company said it would consider the contract terminated if it fails to receive approval from the Chinese government by March 26, which is the deadline for the termination fee of US$154 million in cash it owes to KKR.
Applied Materials had projected that its worldwide fab equipment market share would increase from 18% to 20% through the acquisition.
Kokusai split off from Hitachi Kokusai Electric in June 2018. The firm specializes in deposition equipment for the oxide layer on wafers.