President Trump halts Penang-born Tan's Broadcom takeover of Qualcomm R

President Trump halts Penang-born Tan's Broadcom takeover of Qualcomm R
In this file photo taken on November 2, 2017 US President Donald Trump jokes with Broadcom CEO Hock Tan as he announces that Broadcom woud be moving back to the US in the Oval Office at the White House in Washington, DC.
PHOTO: AFP

WASHINGTON: US President Donald Trump issued an order on Monday prohibiting semiconductor maker Broadcom Ltd's proposed takeover of Qualcomm Inc on grounds of national security, bringing an end to what would have been the technology industry's biggest deal ever.

Qualcomm had rebuffed Broadcom's US$117 billion (S$153.5 billion) takeover bid, which was under investigation by the US Committee on Foreign Investment in the United States (CFIUS), a multi-agency panel led by the US Treasury Department that reviews the national security implications of acquisitions of US corporations by foreign companies.

"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 released on Monday said.

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."

The US Treasury Department letter was "obviously a poison pill," Jim Lewis, a CFIUS expert at the Center for Strategic and International Studies, said before the Trump order. He described the CFIUS communication to Broadcom as "unprecedented."

The semiconductor industry is racing to develop chips that power so-called 5G wireless technology, allowing the transmission of data at faster speeds.

San Diego-based Qualcomm has emerged as one of the biggest competitors to Chinese companies vying for market share in the sector, such as Huawei Technologies Co, making it a prized asset.

A source familiar with CFIUS' thinking had said that if the deal was completed, the US military was concerned that within 10 years, "there would essentially be a dominant player in all of these technologies and that's essentially Huawei, and then the American carriers would have no choice. They would just have to buy Huawei (equipment)."

Broadcom had struggled to complete its proposed deal to buy Qualcomm which had cited several concerns including the price offered and potential antitrust hurdles.

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