Intel to buy Broadcom?

Inc. All rights reserved. This material may not be published broadcast rewritten or redistributed

Inc. All rights reserved. This material may not be published broadcast rewritten or redistributed

President Trump's order to block Broadcom from taking over Qualcomm was a step to protect American companies from foreign competition, Stephen Hadley, former national security advisor for President George W. Bush told FOX Business.

Broadcom shares closed the trading day up 3.5 per cent to $262.84 and gained slightly more in after-market trades.

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

The White House statement directs Broadcom and Qualcomm to "immediately and permanently abandon the proposed takeover", and verify in writing to the foreign investment committee that they have indeed terminated the deal and any such variation.

The Trump administration nevertheless balked at the prospect of a prominent USA chipmaker being owned by a foreign company, particularly at a time countries around the world are gearing up to build ultra-fast "5G" mobile networks that could tip the balance of power in technology.

Trump's order also disqualifies all 15 of Broadcom's proposed candidates for Qualcomm's board from standing for election. However, the attention wasn't welcomed by Qualcomm's board and over the intervening time between then and now, Broadcom has been convincing Qualcomm shareholders that it would manage the company better and give a better return. Whether Intel lobbied in favor of blocking the Qualcomm-Broadcom deal or not, it can join Qualcomm in celebrating its failure. Broadcom played its own game of carrot and stick, with an improved share price offer, but also offered its own proposed board of directors slate to shareholders in a move meant to launch a hostile takeover.

The decision to block the deal was unveiled just hours after Broadcom chief executive officer Hock Tan met with senior officials at the CFIUS in a last attempt to salvage the transaction. He previously adopted the same approach when blocking the sale of United States technology firm Lattice Semiconductors to Chinese-backed company Canyon Bridge Capital Partners in September 2017, citing national security risks again.

Broadcom said in a statement it is reviewing the order but emphasised it "strongly disagrees that its proposed acquisition of Qualcomm raises any national security concerns".

Two analysts said Xilinx and Mellanox would be a good fit for Broadcom, though not as transformational as Qualcomm.

Qualcomm has confirmed it has received the notice, while Broadcom has yet to respond to TechRadar Pro's requests for comment.

Qualcomm and a host of other big technology companies are racing to build a next-generation nationwide network known as "5G" with download speeds that could be 100 times faster than what most consumers experience now on their wireless service.

In November the U.S. president and Broadcom chief executive Hock Tan jointly announced the company's decision to relocate its headquarters to the USA, with Trump saying at the time he was "thrilled" at the move.

Qualcomm is now the third biggest chipmaker in the world after Intel and Samsung, but is considered by many analysts to be the leader in developing 5G chips, followed by Broadcom and Chinese telecoms giant Huawei. Shares of Broadcom rose less than 1 percent. That could allow Chinese companies, namely Huawei Technologies Co, to become the dominant supplier, the United States said. Intel could also be hurt in a trade war, as I wrote March 8, because it has major operations in China.

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