Trump sends message: USA tech not for sale

Trump sends message: USA tech not for sale

With this in mind, analysts have said a deal between Qualcomm and Broadcom could have given Huawei the chance to take over the top spot in years to come - a situation United States politicians wanted to prevent given their ongoing security concerns around Chinese telecom firms doing business with USA carriers.

The cash-and-stock bid, which Qualcomm had rejected, was under investigation by the U.S. Committee on Foreign Investment in the United States, a multi-agency panel led by the Treasury Department that reviews the national-security implications of acquisitions of U.S. corporations by foreign companies.

Qualcomm has emerged as one of the biggest competitors to China's Huawei Technologies Co in the sector, making Qualcomm a prized asset. However, it is not clear what rules Broadcom would have to follow if it goes ahead with announced plans to move its headquarters to the US.

While it did not identify those entities, the letter repeatedly described Qualcomm as the leading company in so-called 5G technology development and standard setting. CFIUS said such a move could weaken Qualcomm - and thereby the US - against foreign rivals racing to develop next-generation wireless technology known as 5G, such as China's Huawei Technologies Co.

Broadcom and Qualcomm could not be immediately reached for comment.

"A shift to Chinese dominance in 5G would have substantial negative national security consequences for the US", CFIUS said.

"Given well-known US national security concerns about Huawei and other Chinese telecommunications companies, a shift to Chinese dominance in 5G would have substantial negative national security consequences for the United States", the letter says.

This is the fifth time a United States president has blocked a deal based on CFIUS objections and the second deal Mr Trump has stopped since assuming office.

CFIUS's decision to review Broadcom's proposed bid came just days before Qualcomm shareholders were set to vote on whether to replace six of the company's 11 directors with nominees put forward by Broadcom, a result that could have helped Broadcom achieve the takeover.

Only five takeovers of American firms have been blocked by USA presidents on national security grounds since 1990. The company will also drop its challenge to Qualcomm's board, the people added. 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.

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

The order issued by the White House cited "credible evidence" that Broadcom taking control of Qualcomm potentially threatened to "impair the national security of the United States".

Shares of Qualcomm slid more than 4 percent in early trading Tuesday.

This item was corrected at 12:32 p.m. ET on Tues., March 13, 2018 to show that A bipartisan group of 22 House members wrote to the Committee on Foreign Investment in the U.S.in December 2016, not December of previous year.

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