undergroundnewsroom.com April 22, 2018

US Government blocks Broadcom's bid to takeover Qualcomm

16 March 2018, 01:08 | Clyde Nash

Broadcom was trying to acquire Qualcomm in a $117-billion deal

Trump blocks Broadcom from acquiring Qualcomm

There were concerns the takeover could have led to China pulling ahead in the development of 5G wireless technology. It also comes just days after Trump imposed hefty tariffs on imports of steel and aluminum.

The US Committee on Foreign Investment in the US (CFIUS) does not usually get involved in transactions involving foreign and US companies until a deal is formally signed and announced.

Broadcom has said it is reviewing the presidential order, adding that it "strongly disagrees that its proposed acquisition of Qualcomm raises any national security concerns".

Scott Peters, a Democrat who represents the 52nd congressional district that includes northern San Diego, also opposed the deal because of concerns about national security and US competitiveness in wireless technology.

Shares of Qualcomm slid more than 4 percent in early trading Tuesday.

The order says there is credible evidence that Broadcom, through exercising control of Qualcomm, "might take action that threatens to impair the national security of the United States".

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While initially founded in the US, Broadcom reincorporated in Singapore in 2016 after it was sold to Avago.

But Trump's order put a clear hold on that strategy.

Part of a war: DealBook notes that the dropped deal could place Qualcomm in the midst of fierce governmental protectionism.

"Although we are disappointed with this outcome, Broadcom will comply", the company said in a statement Wednesday, bringing to an official end a months-long battle to land the technology industry's biggest ever deal. The company has "active sole source classified prime contracts" with the Pentagon, according to a letter from Treasury. Underscoring the risks it saw in the deal, CFIUS intervened in the middle of a proxy fight rather than waiting for a formal purchase agreement. "Qualcomm and to some degree Cisco are the last two that keep the United States in the game when it comes to telecom, and we don't want to lose them", he said.

This would likely help Chinese competitors such as telecommunications firm Huawei, particularly in the emerging 5G blazing fast wireless internet, where a stronger China could present a national security issue.

"If there's not a trusted domestic supplier of chips, everyone will have to go to a Huawei, or [another] foreign supplier", said Brian Fleming, an attorney at Miller & Chevalier who worked in the Justice Department's national security division under both Trump and former President Barack Obama.

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