Trump blocks Broadcom's bid to buy Qualcomm

Trump's move to block the takeover of chipmaker Qualcomm by Singapore-based Broadcom marks a rare instance in which a US president intervened to prevent the foreign acquisition of an American firm. Already the 117-billion-dollar bid made by Broadcom for Qualcomm is huge but Intel would have to cough up even more - some estimate the price at 170 billion dollars - to achieve its goal.

An investigation into the deal by the Committee on Foreign Investment in the United States (CFIUS) announced last week, was - claimed Broadcom - initiated following a complaint by Qualcomm directly.

The Committee on Foreign Investment in the United States (CFIUS) raised its concerns to both companies in a letter last week. It is the committee that reviews the national security implications of acquisitions of USA corporations by foreign companies.

The order said "there is credible proof that leads to believe that if Broadcom Limited, an anonymous society under Singapore law, holds control over Qualcomm Incorporated it could introduce measures that threaten to harm USA national security".

Broadcom initially made a bid for Qualcomm previous year, but Qualcomm wasn't interested.

Broadcom released a statement shortly before Trump blocked the offer saying that if the two companies did merge, that the headquarters could relocate to the USA, instead of the current Broadcom headquarters in Singapore. After the meeting, CFIUS approved Broadcom's takeover of Brocade Communications Systems, conditioned on the headquarters move, according to Broadcom.

But Huawei is still the reason why Trump's administration intervened to block the purchase. CEO Hock Tan sent letters to every US senator and representative, extolling the benefits of this takeover - stating that only a Broadcom-led version of Qualcomm can lead the developing standards for 5G wireless products in a direction that puts USA interests ahead of China's.

Later, in part (e) the USA government ordered that "The Purchaser and Qualcomm shall immediately and permanently abandon the proposed takeover".

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The panel voiced concern that Broadcom, known as an aggressive cost-cutter, would stifle research and innovation at Qualcomm.

"This decision is based on the facts and national security sensitivities related to this particular transaction only and is not meant to make any other statement about Broadcom or its employees, including its thousands of hardworking and highly skilled United States employees", Mnuchin said.

Qualcomm has confirmed it has received the notice, while Broadcom has yet to respond to TechRadar Pro's requests for comment.

Qualcomm is widely considered to be a leader in the race to develop chips that can support 5G capabilities, allowing for much greater connectivity and data usage in mobile handsets.

On the other hand, in a statement late Monday, Broadcom said it is now reviewing the order, but it "strongly disagrees that its proposed acquisition of Qualcomm raises any national security concerns". At least a half-dozen technology deals have collapsed during the Trump administration in the face of CFIUS concerns.

"The revelation that Intel Corp.is considering buying Broadcom Ltd., a company valued at more than $100 billion, shows the depth to which the chip giant feels threatened by a potential tie-up between Broadcom and its rival Qualcomm Inc.", the paper reported yesterday.

However, it's also possible that Trump's decision may also be an attempt to maintain healthy market competition in the U.S., given that a takeover would have created the world's third-largest semiconductor firm behind only Intel domestically, and Samsung internationally.


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