President Trump Blocks Broadcom's Takeover Of Qualcomm, Citing National Security

Trump blocks Broadcom's $117 billion bid for Qualcomm out of national security concerns, a highly unusual move

There were reportedly concerns that the takeover could have led to China pulling ahead in the development of 5G wireless technology.

"This should be viewed as a very positive event not only for Qualcomm but also for the market as a whole", said Stuart Carlaw, Chief Research Officer at ABI Research. Next for Broadcom? According to a lengthy Reuters article, the company could well turn its sights on Xilinx or Mellanox in order to satiate Broadcom CEO Hock Tan's seemingly insatiable appetite for growth through acquisitions.

In a statement, Broadcom vowed to fight the order, saying it "strongly disagrees that its proposed acquisition of Qualcomm raises any national security concerns".

In such a scenario, Broadcom - which now works under the laws of Singapore - would have been considered as an American company and thus its proposed Dollars 117 billion would have been considered outside the preview of a federal agency - the Committee on Foreign Investment in the United States (CFIUS)? that reviews foreign deal.

The CFIUS (Committee on Foreign Investment US) had sent a letter stating that the proposed takeover could create security risks for the country.

Congressman Duncan Hunter said that the merger would "damage American security" and had pointed at Broadcoms "increasing" ties with China to highlight his reservation about the deal.

This weekend, before Trump's order, Mir wrote the same lawyers again, this time to note that the CFIUS investigation "has so far confirmed the national security concerns" identified in his earlier letter. However, Broadcom stated that it had fully complied with the interim orders.

But there may be more to the decision than just Broadcom. "What is unusual is blocking the sale on national security grounds for a non-defense-related company".

Broadcom chief executive Hock Tan had written to United States policymakers last week to argue that legal claims Qualcomm is facing, alleging abuse of its patents to damage competition, should be seen as a risk to Qualcomm's 5G investment.

In interviews with the BBC, analysts said that Trump's decision was also protectionist.

At face value, that argument doesn't hold water, given that Broadcom will very soon be a USA company.

"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. There is certainly an argument that wireless IP/semiconductors are essential to national security".

It is also ironic that the USA is blocking a takeover of Qualcomm out of fears for what it might mean for Chinese leadership in mobile, just when the San Diego based business is increasingly dependent on the Chinese market.

This is unedited, unformatted feed from the Press Trust of India wire.



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