Published: Thu, March 15, 2018
Entertaiment | By Minnie Bishop

US Senate Democratic leader praises Trump's blocking Broadcom's takeover of Qualcomm

US Senate Democratic leader praises Trump's blocking Broadcom's takeover of Qualcomm

The deal had been under scrutiny from regulators and others, and would have seen the Singapore-based Broadcom officially take over the USA -based Qualcomm.

Broadcom said it was reviewing the presidential order, noting that it "strongly disagrees that its proposed acquisition of Qualcomm raises any national security concerns".

"Broadcom, which is in all important respects a US company, has been repeatedly approved by CFIUS in its previous acquisitions of USA companies", the company said in its statement, "and has always engaged productively with CFIUS to ensure USA national security is protected".

Trump's order concludes: "The Purchaser and Qualcomm shall immediately and permanently abandon the proposed takeover".

Trump cites subsection 721f of the Defense Production Act of 1950 in the order, but does not specifically refer to how a merger between the two silicon design firms would "impair the national security of the United States". However, with this order, not only can Broadcom not acquire or merge with Qualcomm but all of the people that it proposed for seats on Qualcomm's board stand disqualified. The first is Intel Corp, the American computing giant who considered buying Broadcom themselves in order to prevent the threatening merger of the two rival manufacturers. CFIUS also said that Broadcom defied an interim order requiring that it give a panel 5 business days' notice before taking steps to officially relocate. Hock Tan, the CEO of Broadcom Ltd. even met with the US Treasury address these security concerns, claiming that the company's proposed buyout of Qualcomm would actually benefit the US security.

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Broadcom, which had pledged to move all its headquarter functions to the USA if it won the day, said it "strongly disagreed" with the reasoning behind the decision.

Senator Tom Cotton said that Qualcomms work is too important to the U.S. national security to let it fall into the hands of a foreign company-and in a hostile takeover no less. "These ties were most recently reflected in the agreements Broadcom signed with HBC, Inspur and StarTimes.�China has a finely honed capability to access the technology of companies such as Broadcom, along with that of their subsidiaries and acquisitions", he said. It will also weaken the position of the USA and Huawei will take a leading position, according to a Bernstein chip analyst, named Stacy Rasgon.

At face value, that argument doesn't hold water, given that Broadcom will very soon be a USA company.

Analysts say Qualcomm is regarded for its focus on research and development (R&D), especially in the field of 5G technology, reports the BBC. "There is certainly an argument that wireless IP/semiconductors are essential to national security".

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