Why the USA killed Broadcom's giant bid for Qualcomm

14 March, 2018, 06:21 | Author: Brenda Erickson
  • Inc. All rights reserved. This material may not be published broadcast rewritten or redistributed

Hock Tan, the CEO of Broadcom Ltd. even met with the US Treasury Dept.to address these security concerns, claiming that the company's proposed buyout of Qualcomm would actually benefit the US security. Singapore-based Broadcom, on the other hand, disagrees with Trump's decision, saying its acquisition of Qualcomm does not pose any security risk.

That could mean a significant reduction in spending on 5G research and development at Qualcomm, which totaled $5.5 billion in its most recent financial year.

"There is credible evidence that leads me to believe that Broadcom... through exercising control of Qualcomm... might take action that threatens to impair the national security of the United States", the statement read.

The CFIUS had concluded that Broadcom's proposed takeover of Qualcomm could pose a risk to the national security of the USA, the Treasury Department said in a letter last week. In 2016 President Obama effectively killed the proposed takeover of German chipmaker Aixtron by Chinese company Fujian (credit to Ropes & Gray's Matthew Rizzolo who highlighted the Obama executive order in a LinkedIn post).

A Qualcomm-Broadcom deal could be the biggest technology sector takeover on record.

Intel is the world's second largest chip maker, however, if Broadcom were successful in its bid for Qualcomm, then the company would be faced by a massive threat in the newly created giant.

The move is highly unusual and at the same time highly demonstrative of Trump's presidency - unusual, because a USA president has previously used an executive order to block such transactions only five times in history, and demonstrative of Trump's continued push to put "America first".

Another worry is that the USA would lose its leadership position in 5G wireless technology if Qualcomm is acquired.

Air Canada resolves IT issues following 'worldwide' systems outage
Be prepared for delays, if you are heading to YVR Airport for a flight with Air Canada. We're expecting some flight delays but we're getting everyone on their way.


Huawei, China's largest homegrown smartphone maker and a leader in tech innovation has been at the center of attacks by USA politicians.

Qualcomm was never really open to the idea of being acquired by Broadcom even though the latter has revised its bid multiple times and even tried to fill Qualcomm's boards with members that viewed the merger favorably.

This move will help Qualcomm relax a bit, but it's hard to tell whether it will hurt or help its pending acquisition of NXP. (NASDAQ:QCOM), which has been under government scrutiny due to national security concerns.

With Broadcom's US move scheduled to take place by April 3, the next few weeks stand to be interesting ones for Qualcomm and Broadcom investors. CFIUS cited Broadcom's thrifty approach to R&D and argued that the Singapore-based company would likely cut costs at Qualcomm, which would in turn weaken its ability to compete against Chinese telecoms rivals such as Huawei.

The Trump administration isn't exclusively concerned about foreign technology-based companies.

This is not the first time Donald Trump has intervened in the acquisition of a USA company by a foreign entity.

Also, a few months back, Huawei said it failed to strike a deal with a US carrier (believed to be AT&T) to sell its smartphones. Last September, he blocked the sale of Hillsboro, Ore. -based Lattice Semiconductor (LSCC) to Canyon Bridge Capital Partners, which has ties to a fund owned by the Chinese government.

Recommended:

  • Larry Page's air taxis are already flying above New Zealand

    Larry Page's air taxis are already flying above New Zealand

    But those countries have never been seen as models for aviation regulators in the rest of the developed world. Countries in the Middle East and Africa have been more willing to allow unmanned flights.
    Russian exile Nikolai Glushkov found dead in London home

    Russian exile Nikolai Glushkov found dead in London home

    A Russian businessman and an associate of the one-time billionaire Boris Berezovsky, Nikolay Glushkov, has died in London . Police say there is no evidence to suggest a link to the March 4 poisoning of former spy Sergei Skripal and his daughter.
    Myanmar militarizes the area from which the persecuted Rohingya fled

    Myanmar militarizes the area from which the persecuted Rohingya fled

    On Monday, the UN's Special Rapporteur Yanghee Lee also said Myanmar's government appeared to be pursuing a policy of starvation. The statement is casting doubt on the country's plans to repatriate hundreds of thousands of refugees.
  • Trump fires Tillerson after visiting Nigeria

    Trump fires Tillerson after visiting Nigeria

    Clearly, Trump does not want a secretary of state, or any Cabinet colleague, who ignores his tweets and gets on with the job. After joining the Trump administration, Tillerson appeared to signal his interest in sticking with the Paris deal.
    Spanish media: Neymar wants Barcelona return

    Spanish media: Neymar wants Barcelona return

    Coutinho, though, seems to be very open to his Brazil teammate engineering a return to Nou Camp. Chelsea will be very hard , and the fans know we have to be together.
    Thakur, Pandey star as India beat Sri Lanka in tri-series T20

    Thakur, Pandey star as India beat Sri Lanka in tri-series T20

    Thisara suffered his seventh T20I defeat in seven games as Sri Lanka skipper while India stay at the top of the tri-series table. Rahul joined a select group of nine other batsmen to get out in this rare fashion in the shortest-format of the game.
  • Kompany eyes once in a lifetime opportunity

    Kompany eyes once in a lifetime opportunity

    Stoke did begin aggressively in the hope of suffocating City but the visitors soon stretched them by playing a few longer passes. City cruised to a straightforward 2-0 win over Stoke City on Monday, with David Silva scoring both goals at the bet365 Stadium.
    Green Bay Packers make free-agent splash, sign TE Jimmy Graham

    Green Bay Packers make free-agent splash, sign TE Jimmy Graham

    The Packers ranked third in red-zone conversion percentage previous year , even with Aaron Rodgers injured for half the season. It's the first major roster cut by new general manager Brian Gutekunst, who replaced Ted Thompson in January.
    PSG top brass in talks with NEYMAR on having him stay put

    PSG top brass in talks with NEYMAR on having him stay put

    He is also in a race against time to be fit for the World Cup in Russian Federation , which begins on June 14. On the 400 million, they paid 220 million and when they bought me they paid 72. " Neymar has a future at PSG".
  • Drew Brees, Saints agree on two-year, $50 million deal

    Drew Brees, Saints agree on two-year, $50 million deal

    If the Saints hadn't reached a deal with Brees, $18 million of prorated signing bonus would have gone onto the deal as dead cap. They have their quarterback back and Brees will most assuredly now end his career with the Saints.
    At least one dead after bus carrying students crashes into ravine

    At least one dead after bus carrying students crashes into ravine

    He said he looked down to see the bus lying on its side near the base of a concrete embankment, its front end crumpled. WKRG in Mobile reported four patients remained at Sacred Heart, two in good condition and two in fair.
    Clerics attack Nawaz Sharif with shoes in Lahore madrasa

    Clerics attack Nawaz Sharif with shoes in Lahore madrasa

    The magistrate sent the accused to judicial custody after police said the culprits were not required for custodial interrogation. Sharif was about to address a gathering at a seminary in Lahore when the student lobbed shoes at him which hit his shoulder.


Popular

Rex Tillerson cuts short Africa trip to return to Washington
Tillerson says Chad has taken important, positive steps to strengthen control over its passports and improve information-sharing. NAIJ.com previously reported that Tillerson would arrive in Abuja on Monday, March 12 for his first official visit to Nigeria.

Another top Trump aide exits White House over security issue
McEntee joined the president's small team three years ago during the earliest days of the campaign. A White House spokesman declined to comment on McEntee's firing.

My best is still a long way off: Serena
Serena Williams' first official tournament since becoming a mom in September was cut short by older sister Venus in Indian Wells . She missed a handful of basic shots in the first set and couldn't get her serve going the way she typically did in the past.

Roger Federer defies logic with backhand slice
Djokovic scrambled to win the second set on Sunday but the rust from the layoff was evident as he made 62 unforced errors overall. Daniel, who is ranked 109th in the world, advanced to the third round where he will face Gael Monfils of France.

Canada's PM bids to reassure aluminum workers about USA tariffs
Trudeau also said it was in part due to the hard work of Canadian officials that Trump exempted Canada from the tariffs last week. But both Mexico and Canada have rejected Trump's linkage of the levies to the ongoing NAFTA talks.

P, FATA announce alliance with Opposition's Sadiq Sanjrani
Mushahidullah said the decision over the election of the Chairman Senate and the Deputy Chairman Senate was made unanimously. The runner-up Raja Zafar-ul-Haq, a candidate of the ruling Pakistan Muslim League-Nawaz (PML-N), secured 46 votes.

At Saturday rally in Pennsylvania, Trump upstages Saccone
I think they wanna make peace. "Not all of our friends on Wall Street love it, but we love it", Trump said of the tariffs. Trump has slammed Republican Rick Saccone as a bad and "weak" candidate, four sources told the news outlet.

Israeli politicians suspect Netanyahu seeks election to survive corruption probes
On Sunday, Netanyahu said that the precedent set by Iran could end up "nuclearizing the Middle East" and prompting a risky arms race.

Duke Blue Devils Top the Irish in ACC Quarterfinals
This one likely stings for Irish fans given Notre Dame won the regular season matchup on the road without Colson and Farrell. Notre Dame (20-14) made just 5-of-23 from 3-point range and had 31 defensive rebounds to 20 for the Irish.

Chuck Todd Responds To Trump - Vulgarity "Creates A Challenge To All Parents"
"He did that through the entire presidential election, including all the Republicans that he beat", Mnuchin added. The Saturday rally wasn't the first time that Trump has referred to Todd as being " sleepy ".