April 23, 2018

Broadcom To Scrap Qualcomm Bid After Trump Block

17 March 2018, 01:36 | Lionel James

Why Blocking Broadcom's Acquisition of Qualcomm Might Be a Good Thing

Trump Blocks Broadcom's $117B Takeover Bid For Qualcomm

Trump's order echoed that concern, saying a takeover by Broadcom "threatens to impair the national security of the United States".

The move by Trump was a rare intervention by a president, but under his administration, multiple deals have been quashed after a review by the panel, the Committee on Foreign Investment in the United States, popularly known as CFIUS.

"Its hard to see a good reason why we should hand over one of our leading computer-chip makers, and thereby give Chinese companies a leg-up in the race to develop 5G and the next generation of technology".

In addition, lawmakers have expressed concerns in the past about foreign companies gaining a foothold in USA telecom infrastructure, which could lead to spying or cybertheft.

A Broadcom-Qualcomm merger would create a new and powerful rival in two areas that Intel is banking on for future revenue growth: smartphone processors and data centers, according to the Journal.

Broadcom's months-long attempt to takeover Qualcomm is officially over following yesterday's intervention by the White House. Led by Tan, a US-educated Malaysian entrepreneur, Broadcom grew largely through acquisitions.

Trump fires Secretary of State Tillerson
Iran agreed before Mr Trump took office to curb its nuclear programme in exchange for the easing of economic sanctions. More recently, reports indicated that Tillerson was shocked to hear about Trump's planned meetings with North Korea .

Wednesday's move is a formality since the presidential order issued Monday had ensured the deal would be killed in any U.S. regulatory review. But the White House feels that the risk of America losing clout in 5G technology and similar fields rises to the level of a national security threat.

Broadcom's ambitions sparked US government concerns over which country will dominate the technology, as well as fears over national security.

Trump's decision in this regard comes after Broadcom said last Friday that it will ask its shareholders to approve its plan to redomicile to the US.

Until the Qualcomm bid, its biggest deal had been the $37bn acquisition of California-based Broadcom, where the company, called Avago Technologies at the time, got its current name. Qualcomm had rejected Broadcom's unsolicited offer in February before the government stepped in. The "national security" defense used to deflect the hostile takeover may turn out to be a double-edged sword.

Broadcom indicated in its statement it will move forward with its effort to move its headquarters back to the United States.

These actions signal the Trump administration's aggressive review posture for Chinese (and other) foreign investment into US technology firms under an ever evolving, expanding view about national security.

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