President Trump blocks the Broadcom takeover of Qualcomm on national security grounds

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President Donald Trump ordered the Singapore-based company Broadcom to cease its attempts to buy the USA company Qualcomm, for which it had launched a hostile takeover of 117 billion dollars.

The Singapore-based company also withdrew its list of directors that were nominated for election to Qualcomm's board.

In such a scenario, Broadcom - which now works under the laws of Singapore - would have been considered as an American company and thus its proposed Dollars 117 billion would have been considered outside the preview of a federal agency - Committee on Foreign Investment in the United States (CFIUS) – that reviews foreign deal.

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.

Broadcom had been pursuing Qualcomm for about four months.

Broadcom's attempted takeover came as companies around the world are gearing up to build ultra-fast "5G" mobile networks that could tip the balance of power in technology.

However, at the end of the day, the White House cited national security reasons in scuttling the deal, namely not wanting Qualcomm to become a foreign-owned company.

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In a statement, Broadcom said that it would comply with Trump's order, formally abandoning what would have been the biggest takeover in the history of the technology industry. Singapore-based Broadcom, on the other hand, disagrees with Trump's decision, saying its acquisition of Qualcomm does not pose any security risk.

The Trump administration has previously blocked China-related deals, including the sale of Lattice Semiconductor to an investment group, and the acquisition of Moneygram by an Alibaba-affilifated company.

Broadcom's ambitions sparked USA government concerns over which country will dominate the technology, as well as fears over national security.

In a letter, the CFIUS had confirmed the national security concerns.

Broadcom has been going through a process of moving its legal headquarters to the U.S.in an effort to distance itself from its Asian roots.

Broadcom's board met late on Tuesday to formalize plans to move its base to the United States, at a cost of about $500 million a year under a higher tax rate, the sources said.

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