Published: Wed, March 14, 2018
Technology | By Russell Knight

Trump Blocks Biggest Tech Deal in History: Here's Why

Trump Blocks Biggest Tech Deal in History: Here's Why

Hock Tan, CEO of Broadcom, speaks on the floor of the New York Stock Exchange shortly before the opening bell in New York, U.S., February 12, 2018. There are also concerns that Broadcom could scale back research and development spending at Qualcomm, given its track record of aggressive cost-cutting.

Citing unnamed "people familiar with the matter", The Wall Street Journal yesterday reported that should Broadcom appear likely to take over Qualcomm, Intel "could step in with its own offer for Broadcom".

The Committee on Foreign Investment in the United States (CFIUS), which raised concerns about the Qualcomm deal, listed the highly-leveraged nature of Broadcom's bid for its larger rival as a major concern and a risk to Qualcomm's leadership on mobile technology. While the change in headquarters has been in the works since late past year, the earlier date would complete the process before a scheduled vote by Qualcomm shareholders.

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Glushkov had lived in London in recent years, after being granted political asylum in Britain. He spent five years in jail and was freed in 2004.

Announcing the move, Trump didn't elaborate on what he described as "credible evidence" that showed that the proposed deal "threatens to impair the national security of the US".

The Committee on Foreign Investment in the United States (CFIUS), which regulates foreign investment, said that it was investigating "the risks associated with Broadcom's relationships with third party foreign entities", and the "national security effects of Broadcom's business intentions with respect to Qualcomm".

Treasury Secretary Steven Mnuchin, who chairs CFIUS, said: "This decision is based on the facts and national security sensitivities related to this particular transaction only and is not meant to make any other statement about Broadcom or its employees, including its thousands of hard working and highly skilled USA employees". While Qualcomm could go to court after shifting its headquarters, effectively challenging the national security aspect of the case, the deal would still be subject to oversight from the U.S. Department of Justice, which could oppose it on anti-trust grounds. The deal had been under scrutiny from regulators and others, and would have seen the Singapore-based Broadcom officially take over the US -based Qualcomm. Now that the order has been issued, it's unclear whether the company will still redomicile, as this would not make a difference in the proposed merger.

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Neighboring countries are doubtful about America's commitment to a political resolution. "It's not a popular insurgency", he said. But Taliban attacks have continued, including a January suicide bombing in Kabul that killed more than 100 people.

While the WSJ claimed that Intel was considering making a bid in order to thwart Broadcom's now-obstructed Qualcomm takeover, the report added that chipmaker might launch a takeover bid for Broadcom regardless. On Twitter Friday, Bloomberg presenter Jonathan Ferro called the state of affairs a "Russian doll of chip deals".

Broadcom may be Singapore-domiciled, but it was originally an American company, still has the majority of its staff and office space in the USA, and had announced plans to re-domicile there. Consolidation in the mobile chip market could also have significant ramifications for smartphone buyers.

It would have been the most valuable tech takeover in the world had it gone ahead. Currently, the company is still based in Singapore, despite having a massive presence in San Jose, California.

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He did that throughout the entire presidential election. "But again, don't take these campaign rallies and focus them on that's what it is".

In the Broadcom-Qualcomm deal, the focus is on so-called "5G" wireless technology, which promises data speeds that rival those of landline broadband now. See full story 3/13/18.

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