Blocked by Trump, Broadcom Officially Withdraws Offer to Acquire Qualcomm

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Broadcom said today it is abandoning efforts to take over U.S. smartphone chipmaker Qualcomm, two days after its bid was blocked by President Donald Trump over national security concerns.

The US President Donald Trump has blocked the Qualcomm-Broadcom deal citing national security concerns.

At the start of the week, Trump said the USA government would block the deal, set to be the largest in technology history, after "credible evidence" showed that the merger "threatens to impair the national security of the US".

As such, Broadcom and Qualcomm "shall immediately and permanently abandon the proposed takeover", Trump ordered.

With the Broadcom takeover behind it, Qualcomm "can get back on target", said Larry Townes, project director of the Georgetown Center for Business and Public Policy.

"We do not see any possible repercussions to US-Singapore relations - whilst Broadcom is incorporated in Singapore and is Singaporean-led, most of its manufacturing and R&D base is still centred in the US", he said.

CFIUS noted that a Broadcom-Qualcomm merger could weaken Qualcomm's leadership in the field. Broadcom had its headquarters in Irvine, Calif., until a Singapore-based company bought it in 2015. There were concerns the takeover could have led to China pulling ahead in the development of 5G wireless technology.

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"Over time that would mean US government and USA technology companies could lose a trusted US supplier that does not present the same national security counterintelligence risk that a Chinese supplier does", said Brian Fleming, an attorney at Miller & Chevalier and former counsel at the Justice Department's national security division.

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

Broadcom is still seeking major mergers and acquisitions and isn't likely to change course due to the failure of its attempt to seize control of Qualcomm, according to a number of analysts interviewed by Reuters.

One factor that may have pushed CFIUS to move quickly was a unusual maneuver by Broadcom to relocate to the United States.

The company also withdrew its slate of independent nominees for Qualcomm's board.

It now could possibly make one more offer for Qualcomm once it completes its relocation to the USA, said Zino.

Qualcomm and a host of other big technology companies are racing to build a next-generation nationwide network known as "5G" with download speeds that could be 100 times faster than what most consumers experience now on their wireless service.