Broadcom boss 'will beat Trump deal block'

  • Broadcom boss 'will beat Trump deal block'

Broadcom boss 'will beat Trump deal block'

With his swift rejection of Broadcom Ltd.'s hostile takeover of Qualcomm Inc., President Donald Trump sent a clear signal to overseas investors: Any deal that could give China an edge in critical technology will be swatted down in the name of national security.

San Diego-based Qualcomm evolved from a U.S. military aerospace contractor to become the dominant player in wireless radio technology over the past two decades, with its chips used in half of all smartphones.

Also of note, China's minister for information technology said in an interview last week that the country is already preparing for the development of 6G technologies.

The Committee on Foreign Investment in the United States (CFIUS), which raised concerns about the Qualcomm deal with Trump, listed the highly leveraged nature of Broadcom's bid for its larger rival as a major concern coupled with the risk of the USA losing mobile technology leadership.

The last deal Mr. Trump blocked was Chinese government-backed Canyon Bridge Capital Partners' attempt to buy Portland, Ore. -based Lattice Semiconductor Corp.

You guys know this already, but Broadcom and Qualcomm have been going back and forth over several months now after Broadcom attempted to acquire the USA chipmaker. He described the CFIUS communication to Broadcom as "unprecedented".

The CFIUS panel itself had also initially been divided over whether it had the right to commence its review before the deal was signed, with representatives from the Departments of Justice, Homeland Security, Defense and Energy urging CFIUS to begin its review of the deal before Qualcomm shareholders went to vote on the slate of directors that included Broadcom's nominees, according to people familiar with the matter.

The order issued by the White House cited "credible evidence" that Broadcom taking control of Qualcomm potentially threatened to "impair the national security of the United States".

Analysts said Broadcom can still build heft through smaller deals.

Mr Trump's move accelerated a decision that appeared likely after CFIUS told Broadcom in a letter on Sunday that its investigation "so far confirmed the national security concerns". Broadcom's options are "not many, and not good", said Michael Gershberg, an attorney with Fried, Frank, Harris, Shriver & Jacobson LLP, who has experience with CFIUS cases.

A Broadcom-Qualcomm merger would create a new and powerful rival in two areas that Intel is banking on for future revenue growth: smartphone processors and data centers, according to the Journal.