Singapore-based Broadcom ditches efforts to take over U.S. chipmaker

The fight between the U.S. and China to influence 5G standards is gonna be really ugly

Singapore-based tech company Broadcom Limited announced Wednesday that it will comply with President Donald Trump's orders and cancel plans to force a takeover of USA chip maker Qualcomm.

It is uncertain whether or not this will circumvent the national security concerns and allow Broadcom to move past the executive order, however we know that for now, Qualcomm is free to proceed as normal without worrying of an impending hostile takeover.

Late Monday, Broadcom said in a statement regarding the order that it "strongly disagrees that its proposed acquisition of Qualcomm raises any national security concerns".

Update: Later in the day on Monday, March 12, after this story was published, President Trump signed an executive order prohibiting Broadcom from acquiring Qualcomm.

CFIUS was anxious that Broadcom's takeover would lead to a decline in investments in research and development in the sector, opening the door for Chinese firms to take the lead in developing next-generation wireless technology.

But the president ordered a block for any further attempt and disqualified any of Broadcom's potential direct appointees, essentially declaring the deal dead.

While they are rival chip companies, Broadcom and Qualcomm are very different in their approaches to the market, according to Mr Moorhead.

Tan bought California-based companies Broadcom for US$37 billion in a leveraged deal in 2015 and Brocade Communications in a US$5.5 billion deal two years later.

One major worry for the technology industry is that the White House's move to block the deal will hinder foreign investment in the USA, even as the Trump administration seeks to make the country friendlier to businesses. It requires Broadcom and Qualcomm to "immediately and permanently abandon the proposed takeover". Broadcom is still expected to complete its re-domiciliation process by early spring and move its corporate headquarters back to San Jose next month.

Broadcom's attempted takeover came as companies around the world are gearing up to build ultra-fast "5G" mobile networks that could tip the balance of power in technology.

Last week's Treasury letter said a takeover of Qualcomm could lead to a loss of USA influence in 5G standards, opening the door for Chinese firms like Huawei to dominate. The company was hoping that their current process of moving its headquarters back to the US would be enough to alleviate the concerns put forth by the federal government.

The prospect of Broadcom buying Qualcomm and its valuable 5G research reportedly spurred Intel to consider buying Broadcom.

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