Trump Order Bans Broadcom-Qualcomm Merger

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Senator Chuck Schumer, the top Democrat in the U.S. Senate, on Tuesday praised President Donald's Trump's decision to block chipmaker Broadcom Ltd's proposed takeover of Qualcomm Inc, calling China's trade practices "rapacious".

Qualcomm has been attempting to block the advances of Broadcom for several weeks now and asked the CFIUS to check out the national security risks of such a merger.

The deal was under scrutiny by a national security panel called the Committee on Foreign Investment in the United States, which advises Trump.

However, neither Huawei nor other Chinese tech companies have taken any active part in Broadcom's acquisition talk with Qualcomm. There were concerns the takeover could have led to China pulling ahead in the development of 5G wireless technology.

Congressman Duncan Hunter said that the merger would "damage American security" and had pointed at Broadcoms "increasing" ties with China to highlight his reservation about the deal. However, Broadcom stated that it had fully complied with the interim orders.

If Broadcom successfully relocates to the U.S., it would escape the jurisdiction of CFIUS, but for the time being Trump's order has put a hard stop on the company's ambition to acquire Qualcomm in any case. They responded, "Broadcom is reviewing the Order".

The staff at Qualcomm's offices are likely breathing a sigh of relief at the governmental intervention, given that the Snapdragon manufacturer was doing its best to resist the takeover, claiming that it was undervalued.

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The prospect of Broadcom buying Qualcomm and its valuable 5G research reportedly spurred Intel to consider buying Broadcom.

Trumps decision comes after Broadcom said last Friday that it would ask its shareholders to approve its plan to redomicile to the US.

Intel of course, are no strangers to Washington offices, and Intel CEO Brian Krzanich served on Trump's Manufacturing Initiative advisory board until August past year. It sees 5G as a fresh start to make a bigger mark in the mobile world, but likely didn't want to compete against the combined might of Broadcom and Qualcomm.

Apparently, the United States government agrees.

So, what does Trump mean by "national security", exactly? We saw this recently when the government blocked United States carriers from offering Huawei's flagship phones. 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 U.S. and economic rival China.

In November 2017, a few days before Broadcom announced the $117 billion offer to acquire Qualcomm, the company's CEO Hock Tan announced during a White House visit that Broadcom's headquarters would be moved from Singapore to the U.S. The company is set to complete its headquarters relocation by April 3.

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