White House halts Broadcom-Qualcom deal due to security issue

US President Donald Trump has decided to block Broadcom ’s proposal to buy Qualcomm . The president issued an executive order to ban the acquisition on Monday, citing national security concern.

Trump stated that there is an”imminent threat” behind the acquisition. Broadcom is a Singapore-based company. Qualcomm is an American telecommunication and semiconductor firm. The company is known for holding several essential technology patents.

The 70-year-old billionaire accused Broadcom of taking further actions that could impair the US national security should the deal take place.

But, Trump’s order does not elaborate further about threats on the national security from the acquisition.

But the real reasons are more than just a security concern. According to Stacy Rasgon, chip analyst at Bernstein, the US worries that Broadcom ’s practice will affect investment significantly, particularly in the 5G roadmap. The Broadcom acquisition will likely weaken Qualcomm and affect the US standing, allowing a Chinese tech giant Huawei to dominate.

Qualcomm shows no signs of giving up

Qualcomm shows that it never gives up in doing whatever it can to take over Broadcom . In February, Qualcomm declined a Broadcom offer worth US$ 121 billion, saying the figure was significantly undervalued.

Broadcom stated it is willing to move its Singapore headquarter to the US in April. Many people assume the decision (to relocate its office) aims to pave the way for the merger. Also, the Singapore-based telecommunication giant wants to replace Qualcomm ’s entire board to be more friendly toward a takeover.

The US government’s concern got attention from the Committee on Foreign Investment in the United States (CFIUS) which later made a final recommendation for Trump regarding the acquisition proposal.

The Intel factor

The chipmaker giant Intel is considering taking over Broadcom for over US$ 100 billion, should the Singapore-based firm acquire Qualcomm , according to The Wall Street Journal reports.

But an analyst assumed that Intel will not likely realize the plan, saying that Intel will gain no benefits of taking over Broadcom . According to Handel Jones from the International Business Strategies, Broadcom ’s products will not go well with Intel ’s operational manufacturing.

Broadcom ’s market value currently stands at US$ 104 billion.

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