Broadcom Will Still Redomicile to US After Ending Qualcomm Bid

President Trump “US Technology is Not for Sale

President Trump “US Technology is Not for Sale

The White House on Monday blocked a hostile takeover of USA chip-maker Qualcomm by its rival Broadcom, citing "credible evidence" that the deal would "impair the national security of the United States". One motivation may be the fear that Broadcom will cut Qualcomm investment in 5G technology, which allows faster transfer of data, ceding the advantage to Chinese competitor Huawei and weakening USA tech leadership. Companies including Qualcomm and China's Huawei have been investing heavily to stake their claim in the underlying technology.

The crux of the problem according to US officials is that Qualcomm represents the country's biggest hope in leading the 5G mobile technology race, and is among the biggest competitors to China's Huawei.

Broadcom said in a statement on Monday that it "strongly disagrees that its proposed acquisition of Qualcomm raises any national security concerns".

The company also appreciated the statement from the US Treasury Secretary and the Committee on Foreign Investment in the US (CFIUS) chair Steven Mnuchin on March 12. A Qualcomm acquisition would have amounted to the largest technology deal in history.

A shareholder meeting was scheduled for earlier this month to vote on the new board, however this was delayed until next month at the request of the Committee on Foreign Investment in the United States (CFIUS), which can prevent business deals where it's deemed could harm national security.

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. He said: "This decision is based on the facts and national security sensitivities related to this particular transaction only". Analyst B. Riley cites Mellanox as a possible acquisition, although adds that the Israeli company might be too small.

Broadcom thanked both its own stockholders and Qualcomm stockholders, some of whom have expressed concern at the future of the company.

Broadcom said earlier this year it would fully be a US domiciled company by May 6.

"5G is a core piece of the franchise Broadcom is trying to purchase", Bernstein analyst Stacy Rasgon wrote in a note to clients before the deal was blocked.

Broadcom and Qualcomm are likely to pursue other deals now that Broadcom's offer has been withdrawn.

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