While Qualcomm recently indicated that it had warmed up to the possibility, President Donald Trump has shot down Broadcom's attempts to clinch a deal that would have resulted in it taking control of Qualcomm citing national security concerns.
Last week, the CFIUS started analyzing the proposed merger, and found serious issues that may hamper the development of next generation wireless technology - 5G - and make the USA information grid subject to Chinese spying and sabotage.
In such a scenario, Broadcom - which now works under the laws of Singapore - would have been considered as an American company and thus its proposed Dollars 117 billion would have been considered outside the preview of a federal agency - the Committee on Foreign Investment in the United States (CFIUS)? that reviews foreign deal. The order says that this step has been taken in the interest of national security and that there's "credible evidence" which suggests that if Broadcom, a company that's based in Singapore, takes control of Qualcomm it "might take action that threatens to impair the national security of the United States".
"Broadcom, which is in all important respects a US company, has been repeatedly approved by CFIUS in its previous acquisitions of USA companies", the company said in its statement, "and has always engaged productively with CFIUS to ensure USA national security is protected".
Let's see what the company will do now. Trump's order blocks those nominees and orders the rescheduling of a stockholder meeting, which Qualcomm said would take place March 23.
Trump said his decision was informed by a recommendation from the Committee on Foreign Investment in the United States, an interagency panel that - in its own words - investigates "transactions that could result in control of a US business by a foreign person". President Trump has placed an order blocking the takeover, due to some security concerns.
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Trump disagreed with this line of reasoning, however.
On Sunday the Committee on Foreign Investment in the US (CFIUS) wrote to both companies to raise concerns over the offer on grounds of national security.
Though Broadcom is based in Singapore, the principal worry rests with China.
"This should concern us as a nation".
The company's prospects in the largest Asian market have grown brighter just as its relations with its most important customer, Apple, have soured considerably over the chip giant's licensing practices. The New York Times' Cecilia Kang posits that Trump blocked the merger as part of the administration's campaign to level the playing field between the United States and economic rival China.
This particular intervention by the President may be unprecedented but follows previous action taken by the White House to limit what it claims are potential national security risks from foreign businesses. "Better to keep it in American hands and protect American national security", Cotton said. The San Diego, California-based company, the world's largest maker of chips for phones (if you own a high-end Android phone, it's likely using a Qualcomm processor), owns a number of the technologies that served as the foundation for 3G and 4G technology, and it's been pouring R&D dollars into 5G.
This is unedited, unformatted feed from the Press Trust of India wire.