Broadcom officially gives up on Qualcomm acquisition following US presidential order

Broadcom officially gives up on Qualcomm acquisition following US presidential order

US President Donald Trump has blocked a planned takeover of chipmaker Qualcomm by Singapore-based rival Broadcom on grounds of national security.

Broadcom's announcement a months-long battle to land the technology industry's biggest ever deal.

The company that's penned numerous key patents in today's smartphones was prey to an acquirer as it fought lawsuits and regulatory fines over how it wielded those patents.

Broadcom indicated in its statement that it will move forward with its efforts to move its headquarters back to the US.

Moreover, Broadcom CEO Tan Hock Eng has also promised to re-domicile Broadcom in the U.S. again.

"Broadcom's board of directors and management team sincerely appreciate the significant support we received from the Qualcomm and Broadcom stockholders throughout this process", the company said.

Yet the Committee on Foreign Investment in the United States, or CFIUS, tasked with evaluating foreign investments in the USA, advised Trump to block the acquisition. Fears that Broadcom would wind down Qualcomm's wireless R&D led the Committee on Foreign Investment in the US, or CFIUS, to warn against the deal, which in turn prompted Trump to intervene.

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"Broadcom strongly disagrees that its proposed acquisition of Qualcomm raises any national security concerns".

"Limitation or cessation of supply of Qualcomm goods or services to the United States government could have a detrimental impact on U.S. national security". According to a letter from the Treasury, the company has "active sole source classified prime contracts".

Qualcomm has always been a leader in previous iterations of broadband cellular network technologies like 3G and 4G and poured research and development money into developing 5G technology and related standards and practices. "Then the USA would have no choice but to use Chinese equipment/technology in communications". "Qualcomm products are likely to underpin 5G and IoT in the long-term".

Elsewhere, US Steel slid more than 7% despite raising its guidance due to Trump's new tariffs on imported steel and aluminum.

Tan bought California-based companies Broadcom for US$37 billion in a leveraged deal in 2015 and Brocade Communications in a US$5.5 billion deal two years later.

Chinese M&A activity is also growing especially within the tech space. Given a wave of consolidation in the telecom-equipment industry, fewer companies are involved "and the stakes are bigger", he said.

Trump's order trumps any plans to make the acquisition a reality because of the possible national security threats.

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