Broadcom's proposed Qualcomm bid blocked on security grounds


"I'm glad the president blocked Broadcom's bid and I'm grateful to the administration for acting quickly before Qualcomm's annual meeting", Peters said in a statement.

Qualcomm is being hurt by weakening demand for smartphones and the company's profit-generating licensing unit has been hit with regulatory fines around the world and a challenge from Apple, one of its largest customers, which has stopped paying up as the two prepare to battle in the courts.

Hunter said it could reflect "an evolution in the thinking" of the committee, perhaps an indication that it's going to approach transactions in which foreign people or entities seek to own 5G wireless technology with the same sensitivity and rigor that the feds now "apply to military equipment traditionally".

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

Broadcom primarily makes chips for wired broadband communications, such as modems, Wi-Fi, switches and routers.

Broadcom, incorporated in Singapore and co-headquartered there and in San Jose, California, denied this.

Trump hosted Broadcom CEO Hock Tan at the White House last November when the company said that it would move its legal headquarters back to the United States. The collapse came despite a charm offensive by Jack Ma, the Chinese tycoon who controls Ant Financial, who had visited President-elect Donald Trump at Trump Tower and pledged to create 1 million American jobs.

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Broadcom's relocation was originally scheduled to be completed by May 6. Aimen Mir, a top Treasury Department official serving on CFIUS, sent a letter earlier this month voicing those concerns to attorneys representing both companies.

"Reduction in Qualcomm's long-term technological competitiveness and influence in standard setting would significantly impact US national security", Mir wrote. On the other hand, China's Huawei has been making commercial yes with big telecom operators across Europe and Asia, focusing on becoming a lead in the race for 5G networks, regardless of the concerns that were proposed by the United States. The company added that it would create a new $1.5 billion fund to train United States engineers. In a statement, the company said "US national security concerns are not a risk to closing, as Broadcom never plans to acquire Qualcomm before it completes redomiciliation". The official added that without new information, CFIUS would consider referring the matter to the president.

The Trump Administration was concerned that Broadcom would put an end to Qualcomm's 5G efforts, paving the way for Chinese telecommunications giant Huawei to take over as the industry leader.

"The proposed takeover of Qualcomm by the Purchaser [Broadcom] is prohibited, and any substantially equivalent merger, acquisition, or takeover, whether effected directly or indirectly, is also prohibited", the order said on Monday.

CFIUS is a multiagency panel that reviews foreign deals and can advise the president if the deals should be blocked due to national security threats.

In fact, this isn't the first time Trump has disallowed a chip industry deal, again on national-security grounds.