In the official executive order statement regarding the proposed takeover Trump has prohibited the takeover as well as prohibited any mergers, acquisitions, or takeovers that are deemed to be "substantially equal" in nature, which essentially means that no deal like this between the two companies will ever take place in the future either.
A source familiar with CFIUS' thinking had said that, if the deal was completed, the USA military was concerned that within 10 years,"there would essentially be a dominant player in all of these technologies and that's essentially Huawei, and then the American carriers would have no choice".
"The case that has been constructed is that, given Broadcom's business practices, the worry is that they will cut investment significantly, particularly in the 5G roadmap, weaken Qualcomm, as well as the US position and allow Huawei, a Chinese company to take the lead", explained Stacy Rasgon, chip analyst at Bernstein.
"Qualcomm has become well-known to, and trusted by, the USA government", said Deputy Assistant Secretary for Investment Security Aimen Mir.
The Singapore-based company has voiced the intention to move its headquarters to the U.S.to ease concerns over the proposed takeover.
So far, CFIUS said its probe confirms the national security risks of the Broadcom-Qualcomm deal. CFIUS listed several issues, including Broadcom's reputation for cutting research spending and potential national security risks.More news: LeBron James freezes Lakers' entire defence with slick no-look pass
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A person familiar with CFIUS's investigation, who requested anonymity to speak freely about the matter, said this strategy may have doomed the transaction. But it announced at a splashy White House event last November that it planned to move its headquarters to the U.S. At the time Donald Trump took credit for the planned move (and the jobs it might create). "They would just have to buy Huawei (equipment)". The initial offer was declined by Qualcomm's board of directors, as was every subsequent counter offer. "The Purchaser and Qualcomm shall immediately and permanently abandon the proposed takeover", it read in part.
The US Treasury Department told Singapore-based Broadcom it confirmed some of its national security concerns about the chipmaker's unsolicited bid to buy rival Qualcomm, in an apparent attempt to block any deal before it is signed.
A move by Chinese companies to fill the void left by the proposed Qualcomm acquisition and dominate the making of 5G chips permitting faster data transmission would have significant security implications for the U.S., the panel found. Penn Davis Mcfarland Inc sold 25,088 shares as Qualcomm Inc (QCOM)'s stock rose 2.14%.
A leader in wireless technology, including burgeoning fields such as 5G connectivity, Qualcomm had rejected Broadcom's bids for purchase. "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.
Qualcomm is embroiled in a fierce legal fight with Apple over the amount it charges for use of its patents, and Broadcom CEO Tan has said Qualcomm's patent licensing business model is "broken".
Shares of Broadcom were marginally higher at $264.50 a share in after-hours trading.