Broadcom to abandon Qualcomm bid post Donald Trump executive order


Trump said that the government had come across "credible evidence" that a merger between the two companies "threatens to impair the national security of the US". Qualcomm disclosed spending on issues including immigration, global trade, taxes and antitrust, among others, showing how it amassed clout in Washington.

Broadcom had planned since a year ago to relocate its legal headquarters to the United States, avoiding the need for a CFIUS review.

U.S. regulators have in recent weeks expressed concerns that the takeover could cause the United States to fall behind China in the race to develop 5G networks.

"If there's not a trusted domestic supplier of chips, everyone will have to go to a Huawei, or [another] foreign supplier", said Brian Fleming, an attorney at Miller & Chevalier who worked in the Justice Department's national security division under both Trump and former President Barack Obama. Fears that Broadcom would wind down Qualcomm's wireless R&D led the Committee on Foreign Investment in the US, or CFIUS, to warn against the deal, which in turn prompted Trump to intervene.

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"(The) investigation has so far confirmed the national security concerns", the panel told the company via a letter. If the acquisition presents a considerable security risk, the process is halted. Just hours after Tan met with USA officials at the Pentagon Monday seeking to salvage the deal, Trump issued the order blocking it. Had Broadcom purchased it, CFIUS says the acquisition could have led to the USA falling behind and China leaping ahead in the race to influence the infrastructure that will connect everything from phones to a network of self-driving cars.

Broadcom's access to the president may have led it to underestimate what was needed to win the approval process.

Broadcom launched its bid in November and had been gathering support from investors to secure a deal.

Actually, CFIUS had already weighed in on the deal last week, preliminarily at least. Broadcom said that it is studying the order and that it doesn't believe it poses any national security threat to the U.S. While numerous standards are in place, there are still plenty of details to be worked out. On the other hand, they allowed NXP to sell off one of its units, Nexperia, to China-based investors previous year. Before that, the company hadn't disclosed any federal lobbying since mid-2014. The failure to anticipate and navigate the city's changing political currents tripped up Broadcom, just as it was on the cusp of winning the takeover battle. Qualcomm is prohibited from accepting the nomination of or votes for any of the Candidates.