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Broadcom ends bid for Qualcomm after President Trump nixes deal

17 March 2018

Singapore-based chip maker Broadcom announced officially withdrew its offer to buy San Diego-based Qualcomm on Wednesday, two days after President Donald Trump issued an executive order blocking the proposed takeover, citing national security concerns. On recommendation from the Committee on Foreign Investment in the United States, the president found there was "credible evidence" that the Singapore-incorporated Broadcom "might take action that threatens to impair the national". It added that "given well-known USA national security concerns about Huawei and other Chinese telecommunications companies, a shift to Chinese dominance in 5G would have substantial negative national security consequences for the U.S".

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. Estimated at a value of $117 billion, the Broadcom-Qualcomm deal would have been the largest yet in the tech industry.

Broadcom had been pursuing Qualcomm for about four months.

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Further, Donald Trump ordered that both Qualcomm and Broadcom must "immediately and permanently abandon the proposed takeover".

Trump's reason for blocking the US$117m deal was "national security risks".

"I$3 f the decision was prompted by Trump's deep skepticism about global trade and Fortress America instincts, that is less defensible and could haunt USA companies in their worldwide dealings", according to the editorial. He blocked the deal just hours after speaking with Hock Tan, Broadcom's CEO at the Pentagon, who was trying to save the deal. Mr. Trump pre-emptively blocked the purchase on Monday, citing national security concerns.

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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 launched the hostile bid on Qualcomm in November previous year at a price of $ 70 per share and in February raised the offer to $ 82.

Meanwhile, Broadcom announced today that is has accelerated its timetable for redomiciling its organization from Singapore to the USA, moving up the date from May 6 to April 3.

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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.

Broadcom ends bid for Qualcomm after President Trump nixes deal