Broadcom's proposed Qualcomm bid blocked on security grounds

In an unusual move, US President Donald Trump blocked Singapore-based Broadcom's $140 billion bid for rival US chipmaker Qualcomm on grounds of national security.

In a presidential order on Monday, Trump claimed that "credible evidence" had led him to believe that if Broadcom were to acquire control of Qualcomm, it "might take action that threatens to impair the national security of the United States."

"The proposed takeover of Qualcomm by the Purchaser (Broadcom) is prohibited, and any substantially equivalent merger, acquisition, or takeover, whether effected directly or indirectly, is also prohibited," the Presidential order read.

Had it gone through, the acquisition would have been the largest technology deal in history, the New York Times said in a report.

In a statement, Broadcom said it was reviewing the order, and contested the notion that the bid posed a security threat.

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

The Presidential order is seen as a move to shelter US companies from foreign competition.

However, some analysts believe the decision was more about competitiveness and winning the race for 5G technology, than security concerns.

"Given the current political climate in the US and other regions around the world, everyone is taking a more conservative view on mergers and acquisitions and protecting their own domains.

"We are all at the start of a race, and you have 5G as a crown jewel that everyone wants to participate in -- and every region is racing towards that," BBC quoted IDC's Mario Morales, Vice President of enabling technologies and semiconductors, as saying.

Broadcom had been pursuing Qualcomm for about four months.

Qualcomm's board of directors unanimously rejected an acquisition proposal from Broadcom last month, saying that they are turning down the latter's $121 billion bid on the grounds that the offer undervalued the business, and also that any takeover would face antitrust hurdles.

--IANS

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