The deal between Broadcom and Qualcomm isn't taking place

The deal between Broadcom and Qualcomm isn't taking place

U.S. President Donald Trump on Monday blocked microchip maker Broadcom's proposed takeover of Qualcomm on national security grounds, ending what would have been the technology industry's biggest deal ever amid concerns that it would give China the upper hand in mobile communications. The letter from CFIUS accused Singapore-based Broadcom of repeatedly violating one of the panel's orders.

Broadcom said in a statement that it is reviewing the presidential order.

The fight with the tech giant has weighed on Qualcomm's market value and created the opening for Broadcom. Sign up for RG Newsletters and get the news delivered directly to your inbox.

Neither Broadcom nor Qualcomm immediately responded to requests for comment.

Broadcom, for its part, had argued earlier Monday - before the president's order - that the national security fears were unwarranted because it plans to redomicile to the early April.

Singapore-based semiconductor company Broadcom has been engaging in a hostile takeover bid for Qualcomm, well known to us for their Snapdragon range of processors.

The tiny computer chips embedded in smartphones, smart home gadgets, and a wide range of other connected devices are expected to become one of the most critical technologies in the coming years.

It also holds key patents which earn massive royalty payments from phone makers, such as Apple.

But Broadcom also hasn't spelled out how it would pay for research and development - which Qualcomm now funds through licensing its cellular patents.

Broadcom CEO Hock Tan had seized on Qualcomm's legal headaches in his attempt to persuade the US government to keep the deal alive. In addition, he said, "it appears CFIUS either found some disturbing things in its investigation or the administration sees 5G and beyond technology leadership important to national security".

The White House said the President was acting on the recommendation of the Committee on Foreign Investment in the United States, which reviews foreign purchases of USA companies, to reject the proposed $117bn offer on national security grounds.

The decision didn't come as a surprise. Broadcom had said the company is supported by institutions in the USA and its majority directors are from the U.S.

Trump made the call to block the takeover following a recommendation from the Committee on Foreign Investment in the United States (CFIUS), which assesses foreign purchases of USA entities. It maintains its administrative headquarters in California.

Trump hosted Broadcom's Tan in the White House past year when the executive announced the proposed move.

"In both the definitive merger agreement that Broadcom provided to Qualcomm and in the revised version that Qualcomm sent back to Broadcom on February 26, 2018, one of the closing conditions was that Broadcom redomicile to the US, and notably, in neither party's draft was the closing of the proposed acquisition conditioned on CFIUS clearance", the company said in a statement. Jacobi Capital Management LLC raised its position in shares of QUALCOMM by 7.8% during the 2nd quarter.