Published: Tue, March 13, 2018
Business | By Kate Woods

Trump blocks Broadcom's bid to take over Qualcomm, reports say

Trump blocks Broadcom's bid to take over Qualcomm, reports say

President Donald Trump issued an order Monday evening blocking any merger of the chipmaking giants Broadcom and Qualcomm, saying it was necessary to protect national security. At least half a dozen technology deals have collapsed during the Trump administration in the face of concerns raised by CFIUS.

The odds of a completed deal were already low after the Committee on Foreign Investment in the US ordered a 30-day stay in Broadcom's attempt to overturn a majority of the board of Qualcomm and force the company into negotiations on its $100 billion offer.

Broadcom's attempts to accelerate the relocation of its corporate headquarters from Singapore to the US may have been a misstep in its efforts to ease CFIUS's concerns. But the terms of the deal were shaky at best from the beginning, with Qualcomm rebuffing Broadcom every step of the way.

Broadcom-which was formerly known as Avago and adopted its new name after buying the original US -based Broadcom in 2016-is based in Singapore.

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Trump's move accelerated a decision that appeared likely after CFIUS told Broadcom in a letter on Sunday that its investigation "so far confirmed the national security concerns". The letter from CFIUS accused Singapore-based Broadcom of repeatedly violating one of the panel's orders.

Broadcom also criticized Qualcomm for asking for the CFIUS investigation.

"I have seen San Diego defense companies suffer massive theft of intellectual property by agents of China's government and the defense industrial complex with which it is inextricably entwined", Hunter said in a release. CFIUS stepped in and through an interim order directed Qualcomm to postpone its board meeting, scheduled for March 6, for 30 days.

For instance, the United States committee cleared Beijing-based Naura Microelectronics Equipment Co in January to buy USA semiconductor manufacturing equipment maker Akrion Systems LLC.

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Broadcom then claimed that if it acquired Qualcomm, it would commit to making the United States "the global leader in 5G". It announced a $1.5 billion innovation fund, promised to build out Qualcomm's work in 5G and assured Congress that it would not sell any assets to foreign entities.

"Broadcom's proposal to acquire Qualcomm has always been premised on the completion of Broadcom's previously announced plan to redomicile", the company said in a statement on Monday.

In a letter to the companies on March 5, CFIUS expressed concerns that Broadcom would not be willing to fund the research needed to maintain Qualcomm's strong position on so-called 5G technology, a forthcoming standard for wireless data networks, leaving the USA with nowhere but China to turn for such technology.

Trump noted the company already employed over 7,500 workers in the USA and said: "We are looking forward to seeing that number grow very substantially". "This was a blatant, desperate act by Qualcomm to entrench its incumbent board of directors and prevent its own stockholders from voting for Broadcom's independent director nominees", Broadcom said in the statement a week ago. In after hours trading, shares of Qualcomm sunk as much as 4 percent from its market close of $62.81.

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