Qualcomm had submitted a remedy plan to resolve competition issues, but an initial investigation found these to be insufficient, said ministry spokesman Gao Feng.
“This deal will have significant influence in the industry and might have a negative impact on competition,” he said.
“Qualcomm’s plan could not easily solve the problems relating to market competition.”
China will review the deal “in a fair manner”, he added.
The comments came as some fear that China might use its approval of the deal as a bargaining chip in trade negotiation with the United States.
Qualcomm refiled an application with the Chinese government on Monday, seeking clearance for its $44 billion takeover of NXP, giving regulators more time to decide on the deal and avert its collapse.
Reporting by Beijing Monitoring Desk and Pei Li; Editing by David Goodman