March 24, 2018

What's Next For Broadcom Now That Trump's Nixed Qualcomm Buy?

14 March 2018, 06:21 | Kara Nash

Senate Democratic leader praises Trump's blocking Broadcom's takeover of Qualcomm

Broadcom, blocked by Trump in takeover bid of Qualcomm, to seek more targets

Broadcom has said in a statement that "US national security concerns are not a risk to closing, as Broadcom never plans to acquire Qualcomm before it completes redomiciliation".

Reuters reports a White House official stated the proposed acquisition of Qualcomm - an American company - by Singapore-based Broadcom could result in China taking a lead in next generation (5G) cellular technology.

That was the immediate reaction from Wall Street's tech sector analysts to Trump's surprise intervention on Monday afternoon to block what would have been the biggest ever tech merger.

On Monday, President Trump blocked what would have been the largest tech deal in history. However, with this order, not only can Broadcom not acquire or merge with Qualcomm but all of the people that it proposed for seats on Qualcomm's board stand disqualified. Given this, a common belief is that a Qualcomm acquisition by Broadcom would have given Huawei a clear path to taking the lead in 5G R&D, a situation that U.S. lawmakers would likely wish to avoid in today's politically charged atmosphere when the USA government is considering actively investigating Chinese investments in the United States.

If Broadcom successfully relocates to the USA, it would escape the jurisdiction of CFIUS, but for the time being Trump's order has put a hard stop on the company's ambition to acquire Qualcomm in any case.

In IP terms there's a complex web of implications that Trump's order throws up.

The Trump administration isn't exclusively concerned about foreign technology-based companies.

Trump Campaign Hires Ex-Aide Under Investigation for 'Serious Financial Crimes'
The 2020 reelection campaign team includes newly appointed manager Brad Parscale, who ran the social media wing last time around. White House press secretary Sarah Sanders declined to comment saying, "We don't comment on personnel issues".

The Chinese company has described the allegations as "baseless". The frosty reception it has received from USA legislators only looks set to grow.

The Trump administration nevertheless balked at the prospect of a prominent US 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.

It is also ironic that the USA is blocking a takeover of Qualcomm out of fears for what it might mean for Chinese leadership in mobile, just when the San Diego based business is increasingly dependent on the Chinese market. To be slightly more accurate, there's been a courtship of Warner Bros. proportions between the two firms, if the part of Qualcomm were played by Penelope Pussycat and the part of Broadcom by Pepé Le Pew.

Broadcom has been aggressively bidding to take over Qualcomm for its chipmaking segment.

Tan has already turned Avago, a small chipmaker with a market value of $3.5-billion in 2009, into a more than $100-billion company. The pair have now been in a bitter, global litigation battle for over a year. At the same time, the company would not "fly" past the boom of devices connecting to the Internet via 4G and 5G - in chips for them and a strong Qualcomm.

According to the Wall Street Journal report, Intel has been working with advisors since past year to see how it can make this move. If President Trump wants to go a step further in protecting America's 5G leader then might he put in a call to Apple's new Silicon Valley HQ to encourage the iPhone giant to settle the epic patent battle?

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