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Broadcom withdraws from Qualcomm deal following presidential order

15 March 2018

Trump issued a presidential order late Monday prohibiting the $117bn takeover of San Diego-based chip maker Qualcomm by the semiconductor giant Broadcom, citing national security concerns.

Several analysts said the USA government is growing concerned that Huawei will develop such technologies nearly as fast as their American counterparts, narrowing the gap between Chinese and US companies.

And for Qualcomm: It got what it wanted-it's been trying to resist the takeover ever since Broadcom launched it.

Over the weekend, news emerged that Intel was interested in buying Broadcom, which was still looking to buy Qualcomm, which wants to acquire NXP.

He didn't elaborate, but last week the Committee on Foreign Investment in the United States (CFIUS) warned that a deal, if successful, could lead to China becoming dominant in the development of 5G, which "would have substantial negative security consequences for the United States".

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Representative Adam Schiff , the top committee Democrat, strongly disagreed, and blasted the announcement as a premature shutdown. The finding is sure to please the White House and enrage panel Democrats. "We're through with interview phase".

Yesterday, the President issued an executive order prohibiting the takeover of Qualcomm by Broadcom, as well as "any substantially equivalent merger, acquisition, or takeover, whether effected directly or indirectly, is also prohibited".

In the Broadcom-Qualcomm deal, the focus is on so-called "5G" wireless technology, which promises data speeds that rival those of landline broadband now.

"In short, US national security concerns are not a risk to closing, as Broadcom never plans to acquire Qualcomm before it completes redomiciliation". "Although Broadcom is based in Singapore, Chinese companies such as Huawei and ZTE have emerged as strong competitors in the race towards 5G".

Update: Later in the day on Monday, March 12, after this story was published, President Trump signed an executive order prohibiting Broadcom from acquiring Qualcomm.

Also, The Committee on Foreign Investment in the United States, which reviews the national security implications of foreign investments in USA companies, had cited concern that Broadcom has a penchant for cutting costs, which might lead to Qualcomm being less of an industry leader. It could just rest easy, or could make a play for either Broadcom or Qualcomm.

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Broadcom's Board of Directors and management team sincerely appreciate the significant support we received from the Qualcomm and Broadcom stockholders throughout this process.

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

Broadcom had been pursuing Qualcomm for about four months.

In a statement, Broadcom said that it was "disappointed with this outcome", and will no longer appoint nominees to Qualcomm's board.

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Broadcom withdraws from Qualcomm deal following presidential order