President Trump preemptively blocks Broadcom's Qualcomm takeover, citing national security concerns


President Trump has issued an order blocking Broadcom's proposed takeover and anything "substantially equivalent" to it over concerns that it might "impair the national security" of the country.

Beyond those 5G concerns, there's even more to Trump's decision to block the deal, experts said.

Broadcom's attempts to accelerate the relocation of its corporate headquarters from Singapore to the USA may have been a misstep in its efforts to ease CFIUS's concerns.

In recent weeks, 5G networking-which Qualcomm has made a central focus of its business-has emerged to draw the attention of regulators and lawmakers, overtaking other issues such as the billions that Broadcom is willing to spend on the deal and oversized influence the combined companies would have in the global technology industry.

A sign to the campus offices of chip maker Broadcom Ltd, who announced on Monday an unsolicited bid to buy peer Qualcomm Inc for $103 billion, is shown in Irvine, California, U.S., November 6, 2017.

An investigation of the deal by the CFIUS had confirmed national security threats related to the Qualcomm acquisition by Broadcom, Treasury said in the letter. Pentagon officials insisted on a review of Broadcom's proxy battle, while the United States treasury department had pushed back, according to people familiar with the matter. As a response, Broadcom publicly accused Qualcomm of "secretly" asking the committee to investigate the deal, which Qualcomm then denied.

Asked if the decision may make Trump more popular in San Diego, where Qualcomm and its 13,000 employees are based, Hunter said: "Trump's going to put the American people first". The final tally on Broadcom's nominees was postponed by USA government order, but an initial count of more than half the votes cast showed Mollenkopf getting the second-lowest number of votes among the nominees for the board.

Trump hosted Broadcom CEO Hock E. Tan in the White House previous year when the executive announced the proposed move.

"Broadcom strongly disagrees that its proposed acquisition of Qualcomm raises any national security concerns", a company spokesperson said in a statement.

Citing a recommendation from a national security panel and other factors set forth under federal law, the statement also proclaims that all candidates that Broadcom (NASDAQ: AVGO) nominated for Qualcomm's board "are hereby disqualified from standing for election".

"The president has been very clear about wanting to take care of competition within the United States and having tech companies stronger and stronger", she added. Jnba Financial Advisors holds 0.19% of its portfolio in QUALCOMM Incorporated (NASDAQ:QCOM) for 16,117 shares.

In a letter to the companies on March 5, CFIUS expressed concerns that Broadcom would not be willing to fund the research needed to maintain Qualcomm's strong position on so-called 5G technology, a forthcoming standard for wireless data networks, leaving the United States with nowhere but China to turn for such technology.

The Broadcom acquisition saga has been a long and troubled one.

He also noted that Department of Defense programs rely on access to Qualcomm products.

Chinese companies such as Huawei Technologies have been investing heavily in research and would be able to step into any void created by a weakened Qualcomm.

While Broadcom shares were holding steady in the wake of the announcement, investors were less enthusiastic about Qualcomm's chances, and shares dropped 4.5 per cent after hours.