Published: Wed, March 14, 2018
World | By Melba Underwood

Broadcom to end bid for Qualcomm, keeps plan to move to US

Broadcom to end bid for Qualcomm, keeps plan to move to US

Yesterday's White House order strikes a blow for Broadcom, whose CEO Hock Tan appeared with the president in the White House in early November to jointly announce the company's plan to redomicile to the U.S. But the order is likely to be welcomed by chipmaking giant Intel, which was reportedly anxious about how the merger of Broadcom and Qualcomm could have threatened its own position in the smartphone processor and data center markets.

"Broadcom strongly disagrees that its proposed acquisition of Qualcomm raises any national security concerns", a Broadcom statement notes.

The Treasury Department hasn't responded to a media request by Observer.

Broadcom said it was reviewing Mr. Trump's order and disputed the notion that the bid posed a security threat.

Broadcom faced challenges nearly from the start of its quest.

For the past few months, there's been a will-they-won't-they dance going on between Qualcomm and Broadcom.

Broadcom has announced that it will relocate its global headquarters to the United States by April 3, 2018, as it continues its efforts for a hostile takeover of Qualcomm. The merger would have created a very large competitor for the United States chipmaker.

Although its name isn't widely known outside the technology industry, Qualcomm is one of the world's leading makers of the processors that power many smartphones and other mobile devices.

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It also holds key patents which earn massive royalty payments from phone makers, such as Apple.

And the US government has already been actively blocking Huawei's USA ambitions, including pressuring AT&T (NYSE:T) from carrying Huawei smartphones just prior to the planned CES 2018 announcement of that deal. The concerns appear primarily to be on the role of the companies (and national interests) in the future development of technology in the mobile sector, especially regarding R&D into 5G technology. To be slightly more accurate, there's been a courtship of Warner Bros. proportions between the two firms, if the part of Qualcomm were played by Penelope Pussycat and the part of Broadcom by Pepé Le Pew.

In the executive order, Trump said there is "credible evidence" that led him to believe that Broadcom might "take action that threatens to impair the national security", after reviewing an analysis by the Treasury Department's Committee on Foreign Investment in the U.S.

The decision didn't come as a surprise. 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. Last week, the Wall Street Journal reported that Intel is interested in making acquisitions to shore up its competition positioning.

Singapore became Broadcom's legal home when it was purchased two years ago, however the company maintains its physical headquarters in San Jose, just 740km from Qualcomm's headquarters in San Diego.

"There may be avenues for the companies to work together in other kinds of arrangements, but anything that looks like Broadcom controls Qualcomm, especially around the 5G business, CFIUS will be alert to".

Trump hosted Broadcom's Tan in the White House previous year when the executive announced the proposed move.

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