Trump signed an order late on Monday to halt what would have been the biggest-ever technology deal on concerns that a takeover of Qualcomm by the Singapore-based company would erode the United States' lead in mobile technology and give China the upper hand.
The Committee on Foreign Investment in the United States (CFIUS), which raised concerns about the Qualcomm deal with Trump, listed the highly leveraged nature of Broadcom's bid for its larger rival as a major concern coupled with the risk of the U.S. losing mobile technology leadership.
The deal had become a lightning rod in a broader battle between the USA and China over chip technology and foreign direct investment more generally, and lawmakers had been watching closely. He added that it "is not meant to make any other statement about Broadcom or its employees, including its thousands of hard working and highly skilled US employees". The group expressed concern that the deal could provide China with critical technology and accused Canyon Bridge of initially trying to obscure its Chinese-government backing, both of which the fund denied. A takeover of Qualcomm by Broadcom would have created the world's third-largest maker of microchips, behind Intel and Samsung.
The Committee on Foreign Investment (CFIUS) has said that it is anxious that Broadcom would slash research and development at Qualcomm.
This is the fifth time a USA president has blocked a deal based on CFIUS objections and the second deal Mr Trump has stopped since assuming office.
Mr 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 company will also drop its challenge to Qualcomm's board, the people added.
Trump issued an order barring the proposed mega-acquisition, saying there is credible evidence such a deal "threatens to impair the national security of the United States", according to a White House statement. But with Broadcom playing countless takeover-related tricks to move closer and closer to being able to buy Qualcomm, the White House and Trump administration has stepped in to block it all.
"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.
Shares of Qualcomm slid more than 4 percent in early trading Tuesday.
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