According to Bloomberg, the company is now working to shift its headquarters from Singapore to the U.S. The transition is expected to be completed by April 3. "It's critical technology and I think it may be less about the Broadcom takeover and more insuring that Qualcomm can keep up with Huawei". Trump's order can not be appealed, legal experts said.
US President Donald Trump today blocked a planned Dollars 117 billion takeover of chipmaker Qualcomm by Singapore-based rival Broadcom for national security reasons, scuttling what would have been the biggest technology deal ever amid concerns that it would allow China to take the lead in the booming market of producing chips. The Trump administration is considering clamping down on Chinese investments in the USA and imposing tariffs on a broad range of its imports to punish Beijing for its alleged theft of intellectual property.
Chris Caso, an industry analyst with Raymond James, pointed out how brief the review of the deal was by U.S. Committee on Foreign Investment, and how rare it is for a U.S. president to intervene.
President Donald Trump hugs Broadcom CEO Hock Tan after he announced the repatriation of his company to the United States on November 2. Trump has blocked two in six months.
In the second such move since taking charge of the Oval Office, US President Donald Trump signed an executive order yesterday, March 12, blocking a $140 billion bid by the US- and Singapore-based semiconductor company Broadcom to take over US-based chips manufacturer Qualcomm.
Qualcomm shares were down 4.5% in after-hours trading to $59.98, while Broadcom shares were relatively flat at $265.
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The saga of the Broadcom-Qualcomm bid is becoming more like a day-time soap now.
Trump isn't the only hurdle to getting deals done. CFIUS is the arm of the Treasury Department tasked with ensuring that foreign investments in US companies won't pose a threat to national security. The Trump administration has endorsed the bill, which Senator John Cornyn, a Texas Republican, proposed with China in mind. If Broadcom fails to get approval even after shifting the headquarters, then the company would possibly take the matter to court.
"CFIUS has identified potential national security concerns that warrant a full investigation of the proposed transaction", the panel wrote in the letter, which was disclosed to the SEC.
Semiconductor firms are racing to develop the latest 5G chips for future wireless networks, and US-based Qualcomm and China's Huawei are widely regarded as leaders in this field. The deal between Qualcomm and NXP is nearing.
Another fear of the United States government is that Broadcom would not push ahead with Qualcomm's 5G R&D plans, leaving China's Huawei technologies to dominate communications tech and equipment used in the world's next-gen tech devices. CFIUS was concerned with what has been described as a hostile takeover of Qualcomm, its competitor and rival.
A White House official on Monday confirmed that the national security concerns related to the risks of Broadcom's relationship with third party foreign entities.