Donald Trump Kills Broadcom's $117B Qualcomm Bid: Here's Why

Pic Reuters

President Donald Trump blocked Singapore chipmaker Broadcom from pursuing a hostile takeover of USA rival Qualcomm, ruling the proposed combination would imperil national security.

Broadcom has also withdrawn its slate of independent director nominees for Qualcomm's 2018 annual meeting of stockholders.

The US Treasury Department (which leads the Committee on Foreign Investment in the US) claims the Broadcom/Qualcomm threatens Qualcomm's future leadership within the next generation of wireless technology.

Qualcomm's chip technology is critical to the development of USA smartphone communications infrastructure and other digital devices.

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. The deal would make Broadcom the third-biggest maker of microchips, behind only Intel and Samsung. Unlike Qualcomm, Tan said, Broadcom financed its innovation through "lawful practices".

Broadcom's months-long attempt to takeover Qualcomm is officially over following yesterday's intervention by the White House. Even after the hostile takeover of Qualcomm was blocked, Broadcom says it plans to complete its move to the U.S. The Singaporean company said in a statement after that report that the probe is not directly related to the Qualcomm bid.

Broadcom, which says it will go ahead with its pledge to relocate to the USA from Singapore, said it was disappointed that President Trump had issued what was effectively a blocking order but reluctantly accepted it.

Trump's reason for blocking the US$117m deal was "national security risks". "In short, USA national security concerns are not a risk to closing, as Broadcom never plans to acquire Qualcomm before it completes redomiciliation".

The decision to block the Broadcom deal also came as the Trump administration has taken a much harder stance on trade, imposing stiff new tariffs on imported steel and aluminum.

As of now, it is not clear if such a move from the Singapore-based company will win Trump's approval.

In a letter, the CFIUS had confirmed the national security concerns.

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

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