Broadcom abandons plans to buy Qualcomm following US government bar

[steven36]

Broadcom "disappointed with the outcome" after Trump barred Broadcom's proposed takeover of Qualcomm on national security grounds

 

 

Broadcom has formally abandoned its pursuit of rival Qualcomm following an order signed by US President Donald Trump earlier this week barring it from buying the US semiconductor company. 

 

The company explained that it has scrapped talks with Qualcomm and will not seek to use forthcoming board elections to try and fill Qualcomm's board with its own nominees - a move it had been planning in a bid to persuade stockholders to go over the head of the Qualcomm board. 

 

Broadcom said it was "disappointed with the outcome", but had no choice to drop plans when President Trump intervened this week.

 

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".

 

That followed a report by the Committee on Foreign Investment in the United States (CFIUS) warning that key technology could fall into the wrong hands if the deal were to go through. 

 

However, Broadcom hit back, saying it "strongly disagrees that its proposed acquisition of Qualcomm raises any national security concerns".

 

In a statement, Treasury Secretary Steve Mnuchin supported the decision. He said: "This decision is based on the facts and national security sensitivities related to this particular transaction only."

 

He added that the government is not trying to "make any other statement about Broadcom or its employees, including its thousands of hard working and highly skilled US employees".

 

Broadcom, though, had struggled to make the case for its proposed deal, with Qualcomm claiming that its bid drastically undervalued the company and, especially, the potential of its 5G mobile communications technology.

 

As part of its attempts to persuade Qualcomm stockholders, and US government and regulators Broadcom promised to shift its headquarters to the US. This, though, failed to convince CFIUS.

 

The firm added that it will "continue to move forward with its redomiciliation process" and will "comply" with the US government's decision.

 

More Info On This At Reuters

 

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[DKT27]

Topic moved to Technology News. I still think it's more technology related rather than security related.

 

Eitherway, politics aside, as people mention this purchase was never going to be good for the consumers.

 

Another thing worth mentioning and quite an important one, Qualcomm was so much sure of never getting sold to them that they said they will need an extra ordinary amount of money - even more than what was being offered, to even consider selling it.

[sixoclock]

Why Trump blocked Qualcomm-Broadcom: It's all about 5G

The unusual move underscores the importance of 5G. But what does an independent Qualcomm mean for the future of the technology?

• by Roger Cheng

March 14, 2018 5:48 AM PDT

Donald Trump just stepped into the global 5G "arms race."

 

The US president late Monday issued an executive order blocking a corporate merger, Broadcom's proposed $117 billion deal to buy mobile chip giant Qualcomm, citing national security concerns. The order came a week after the Committee on Foreign Investment in the US, or CFIUS, expressed concern that the takeover of Qualcomm by Singapore-based Broadcom could leave the US behind when it comes to mobile technology.

On Wednesday, Broadcom withdrew its offer for Qualcomm, saying it would comply with the order. 

 

What's unusual is the timing of both the warning and the presidential order, which came before Qualcomm and Broadcom ever formally agreed to a deal. CFIUS, which is part of the Treasury Department, tends to step in only after a deal is struck and has to go through regulatory review. Indeed, Qualcomm was in the midst of fighting off a hostile takeover. The expedited action underscores the government's view of the importance of 5G wireless technology.

 

"There is credible evidence that leads me to believe that Broadcom … might take action that threatens to impair the national security of the United States," Trump wrote in the executive order.

 

5G, or the fifth generation of cellular technology, is seen as a potential game-changer because of its heightened speed, responsiveness and ability to handle a myriad of connected devices. Beyond giving you a much faster connection on your phone, 5G could serve as the communications foundation for emerging technologies like self-driving cars, streaming virtual reality experiences and advanced telemedicine options like remote surgery.

 

But multiple companies want to influence how 5G technology works, and they're jockeying for position. Unlike older wireless tech such as 3G, where a Verizon Wireless smartphone wouldn't work on AT&T's network, 5G is formed via a global standard that every country and company agrees to. While many of the standards are in place, there are still plenty of details to be worked out.

 

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