Trump Order Bans Broadcom-Qualcomm Merger

Calvin Saunders
March 15, 2018

According to the CFIUS, if Qualcomm was bought over by Broadcom, it would result in cutting the costs of Qualcomm and it would not be able to compete with Huawei or other Chinese companies.

On Monday, the Trump administration issued an order blocking Broadcom's $117 billion hostile bid for rival Qualcomm (NASDAQ:QCOM) on national security grounds, in a move that could effectively end the Singapore-headquartered Broadcom's pursuit of the us communications technology giant.

U.S. President Donald Trump hugs Broadcom CEO Hock Tan as Tan announces the repatriation of his company's headquarters to the United States from Singapore during a ceremony at the White House on November 2, 2017.

Credit: Shutterstock In a move that would have sent shockwaves through the technology industry, Broadcom floated the idea of acquiring Qualcomm in a hostile takeover worth $117 billion.

President Donald Trump issued an executive order Monday blocking Broadcom's takeover bid for the chipmaker Qualcomm, citing national security.

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Qualcomm has yet to comment, but will no doubt be cracking open the champagne on the news after rebuffing multiple offers from Broadcom claiming they "undervalue" the company and its "leadership position in mobile technology". The first is Intel Corp, the American computing giant who considered buying Broadcom themselves in order to prevent the threatening merger of the two rival manufacturers.

"Reduction in Qualcomm's long-term technology competitiveness and influence in standard setting would significantly impact USA national security", CFIUS said in its recommendation.

Trump disagreed with this line of reasoning, however. "Having a well-known and trusted company hold the dominant role that Qualcomm does in the USA telecommunications infrastructure provides significant confidence in the integrity of such infrastructure as it relates to national security". "These ties were most recently reflected in the agreements Broadcom signed with HBC, Inspur and StarTimes.�China has a finely honed capability to access the technology of companies such as Broadcom, along with that of their subsidiaries and acquisitions", he said. The New York Times' Cecilia Kang posits that Trump blocked the merger as part of the administration's campaign to level the playing field between the USA and economic rival China. For one thing, it is only going to become harder for foreign tech companies - not just Chinese - to acquire United States technology businesses as the White House appears receptive to any argument around the diminution of American corporate might.

Analysts say Qualcomm is regarded for its focus on research and development (R&D), especially in the field of 5G technology, reports the BBC. "Better to keep it in American hands and protect American national security", Cotton said.

Last week, several United States lawmakers had called for stopping Broadcoms takeover of Qualcomm.

Other reports by MaliBehiribAe

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