Broadcom officially abandons Qualcomm pursuit

Broadcom officially abandons Qualcomm pursuit

Broadcom officially abandons Qualcomm pursuit

Broadcom is officially withdrawing its $117 billion bid to buy USA chipmaker Qualcomm, two days after President Donald Trump blocked the Singapore company's ambitions over national security fears.

On top of that, China, the U.S. and Europe are racing to develop the next generation of wireless data network, called 5G, for mobile phones and increasingly connected devices.

The Presidential order is seen as a move to shelter United States companies from foreign competition. Estimated at a value of $117 billion, the Broadcom-Qualcomm deal would have been the largest yet in the tech industry.

The Broadcom/Qualcomm transaction had been under review by CFIUS since January 2018 when Qualcomm submitted a unilateral notice of the transaction to CFIUS.

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Qualcomm had come up with many pretty wild arguments against the deal, but it never landed on the one proffered by CFIUS-a lack of R&D for 5G could give Huawei an edge to dominate the 5G world, threatening US national security.

US Treasury Secretary Steven Mnuchin was quick to clarify the decision, stating Trump's order was strictly "based on the facts and national security sensitivities" related to the transaction and not meant to "make any other statement about Broadcom or its employees".

Broadcom, which says it will go ahead with its pledge to relocate to the United States from Singapore, said it was disappointed that President Trump had issued what was effectively a blocking order but reluctantly accepted it. Even though Huawei is in no way directly connected to the deal (it does use chips from both in its telecom equipment), CFIUS is concerned that after the acquisition, Broadcom would slash Qualcomm's research and development (R&D) funding.

Qualcomm, which is the dominant maker of microprocessors for smartphones, had rejected the unsolicited offers from Broadcom, which makes an array of chips for wireless communications, set-top boxes and electronic displays. Singapore-based Broadcom, on the other hand, disagrees with Trump's decision, saying its acquisition of Qualcomm does not pose any security risk. The "national security" defense used to deflect the hostile takeover may turn out to be a double-edged sword. A few weeks after the visit, when Tan promised to headquarter his company in the U.S., Broadcom announced the acquisition of Brocade was complete on November 17. In September, Trump blocked a Chinese state-owned company from acquiring an American semiconductor firm.

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