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

Trump blocks Broadcom's USD 117 billion bid to buy Qualcomm

US chipmaker Qualcomm managed to escape a $117 billion takeover by Singaporean rival Broadcom, thanks to intervention from the White House.

The presidential order said there was "clear evidence" of a U.S. national security concern, with Broadcom able to "take action that threatens to impair the national security of the United States".

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 - Committee on Foreign Investment in the United States (CFIUS) – that reviews foreign deal. At the time, US President Donald Trump called it "one of the really great, great companies".

Broadcom and Qualcomm are likely to pursue other deals now that Broadcom's offer has been withdrawn.

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 has been trying to acquire chipmaker Qualcom for several months now.

"Broadcom thanks the independent nominees who stood for election to the Qualcomm board, not only for their time and effort but also for their unwavering commitment to act in the best interests of Qualcomm stockholders", the company said.

More news: Broadcom confirms it has withdrawn its Qualcomm bid

However, at the end of the day, the White House cited national security reasons in scuttling the deal, namely not wanting Qualcomm to become a foreign-owned company.

It's defensible if his decision was based on a reasonable suspicion Qualcomm's trailblazing research into 5G wireless technology might be transferred to Chinese tech companies that Broadcom has relationships with.

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.

The move followed President Doanld Trump's order for Broadcom to.

But Washington has offered only scant evidence that Broadcom's purchase would endanger national security.

The members of CFIUS include the heads of the Departments of the Treasury (chair), Justice, Homeland Security, Commerce, Defense, State, Energy, the Office of the U.S. Trade Representative, and the Office of Science & Technology Policy.

Broadcom had planned to move its headquarters from Singapore to the United States on April 3, one month before the date it had announced as part of the agreement to buy Qualcomm.

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