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Trump halts Qualcomm takeover by Broadcom for national security

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The odds of a completed deal were already low after the Committee on Foreign Investment in the US ordered a 30-day stay in Broadcom's attempt to overturn a majority of the board of Qualcomm and force the company into negotiations on its $100 billion offer.

The Treasury argued that Broadcom has a history of acquiring companies, and then slashing their spending on new technologies.

The order cited "credible evidence" that led Trump to believe that Broadcom's taking control of Qualcomm "might take action that threatens to impair the national security of the United States".

CFIUS's concerns over the deal are said also to stem from Broadcom's ties to Huawei, which was blacklisted in 2012 along with ZTE when the US House Intelligence Committee cited security risks posed by the companies.

Another fear of the USA government is that Broadcom would not push ahead with Qualcomm's 5G R&D plans, leaving China's Huawei technologies to dominate communications tech and equipment used in the world's next-gen tech devices.

Earlier this month, in response to those fears, Broadcom announced the creation of a $1.5bn fund "to ensure United States leadership in future wireless technology".

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

Senator Tom Cotton said that Qualcomms work is too important to the USA national security to let it fall into the hands of a foreign company-and in a hostile takeover no less.

Trump added that Broadcom "shall uphold its proxy commitments to those Qualcomm stockholders who have returned their final proxies to the Purchaser, to the extent consistent with this order".

The order goes on to say that the entire 15-member board of directors that Broadcom had proposed for Qualcomm are now barred from standing for those positions, that all efforts by Broadcom to purchase Qualcomm are permanently barred from going into effect, and that Broadcom is to immediately terminate all of its efforts to secure ownership of Qualcomm now and forever.

Unfortunately, Broadcom's woes don't end at being rejected by Qualcomm.

CFIUS also said that Qualcomm has a number of military contracts with the US Department of Defense. That could allow Chinese companies, namely Huawei to become the dominant supplier, the US said.

With his swift rejection of Broadcom Ltd.'s hostile takeover of Qualcomm Inc., President Donald Trump sent a clear signal to overseas investors: Any deal that could give China an edge in critical technology will be swatted down in the name of national security.

However, unnerved by the chance of a Qualcomm/Broadcom merging, Intel has been considering to make a move to buy the Singapore-based Broadcom. Broadcom later said it would enhance its investment in 5G and the USA after completing the deal.

Nothing's for certain. Along with ZTE, Huawei began ploughing billions of dollars into the field from 2009 and is now among China's top filers of patents both internationally and domestically, covering everything from data transmission to network security.

Its CEO, American citizen Hock Tan, promised to move the company's legal headquarters back to the U.S.in a meeting with Trump at White House in November.

On Sunday, CFIUS accused Broadcom of having violated the interim notice by failing to provide the panel with five days' notice of any moves to attempt to re-domicile Broadcom to the U.S.

Broadcom primarily makes chips for wired broadband communications, such as modems, Wi-Fi, switches and routers.

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