(Corrects translated word in Chinese foreign ministry quote as "industry", not "production")
* Offer expires on Wednesday
* China only regulator yet to approve deal
* Sources close to Qualcomm say approval looks unlikely
* China though could make last-minute move - source
* Not approving deal may escalate trade tensions
By Michael Martina and Greg Roumeliotis
BEIJING/NEW YORK, July 25 (Reuters) - Qualcomm Inc is yet to win China's nod to buy Dutch chipmaker NXP Semiconductors even as a deadline for the offer to expire is just hours away, raising the prospect the deal could be scuppered amid Sino-U.S. trade tensions.
The $44 billion deal was announced in October 2016, just days before the election of U.S. President Donald Trump and has since become embroiled in a whipsawing trade standoff between two countries who are at loggerheads over trade tariffs and have clashed on issues such as ownership of technology and patents.
Qualcomm, the world's biggest maker of chips for mobile phones, and NXP said in April they would call off the deal if they were unable to win Chinese regulatory approval by July 25, 2359 eastern U.S. time. China was the only hold out from eight of the nine global regulators required to approve the deal.
If the deal collapses, it is likely to aggravate tensions between Washington and Beijing, as the two sides look to avoid tensions spiralling into a fully-blown trade war.
It will leave Qualcomm on the hook for a $2 billion breakup fee and searching for new ways to expand beyond chips for the mobile phone market, where growth has slowed.
A source close to the company said it was coming up against a "stone wall" in dealings with China's anti-trust regulator, the State Administration for Market Regulation, and that there had been no recent progress with them on the deal.
But the source added that it was still a toss-up whether the deal would be approved at the last minute.
A second source close to Qualcomm told Reuters it looks unlikely that approval from China would come on Wednesday and the company is making preparations to pay NXP the fee.
Qualcomm did not respond to requests for comment outside regular U.S. business hours.
The regulator could not be reached for comment.
China's foreign ministry, responding to a question, said on Wednesday that relevant departments were reviewing the deal and had maintained "good communication" with Qualcomm through the review process.
"Qualcomm's takeover deal with NXP will have a far reaching effect on the global semiconductor industry," Chinese foreign ministry spokesman Geng Shuang said at a regular news briefing.
The Chinese foreign ministry has no purview over the review, but is the only government department with a daily briefing that foreign media can attend.
Qualcomm needs Chinese approval because the country accounted for nearly two-thirds of its global revenue last year.
Hopes for the deal rose in May after the White House said it reached a deal to lift a supplier ban on Chinese telecoms equipment maker ZTE Corp. A Qualcomm team met with Chinese officials around the same time in Beijing and had "productive" talks, sources briefed on the matter then said.
Sources in the U.S. business community told Reuters on Wednesday that if the Qualcomm deal falls through it could be considered a serious escalation of the trade war by the White House and would damage China's image as an antitrust regulator.
"It would not be good for China. It will show how obviously distorted its antitrust regime is," a third source said.
Trump has played an outsized role in Qualcomm's fate.
In March, he issued an order blocking Broadcom Inc's $117 billion hostile takeover bid for Qualcomm on concerns that the deal would weaken its position in so-called 5G mobile technology, allowing China's Huawei Technologies Co Ltd to become the dominant player.
Shortly after that, Trump began the process of imposing tariffs on $50 billion in Chinese goods. So far, he has imposed tariffs on $34 billion of these and threatened to levy tariffs on over $500 billion of Chinese exports.
China has retaliated with tariffs on $34 billion worth of U.S. goods.
Since China imports far less from the United States than vice versa, there are fears that China would find alternative ways to strike back - including blocking deals by U.S. companies. (Reporting by Michael Martina in Beijing and Greg Roumeliotis in New York; Additional reporting by Adam Jourdan and Ben Blanchard in Beijing and Subrat Patnaik in Bengaluru; Writing by Sayantani Ghosh; Editing by Muralikumar Anantharaman)