Broadcom abandons plans to buy Qualcomm following U.S. government bar

Broadcom abandons plans to buy Qualcomm following U.S. government bar

Broadcom and Qualcomm could not be immediately reached for comment.

Since disclosing its first bid, worth $103 billion, for Qualcomm on November 6, Broadcom has revised its bid twice, but is yet to strike a deal.

Broadcom is officially withdrawing its $117 billion bid to buy USA chipmaker Qualcomm, two days after President Donald Trump blocked the Singapore company's ambitions over national security fears.

The US government views Huawei - one of the world's biggest telecommunications companies - as a national security threat.

USA regulators have in recent weeks expressed concerns that the takeover could cause the United States to fall behind China in the race to develop 5G networks. That's where national security concerns come in. Six House Republicans sent another letter to Mnuchin March 1, also citing national security risks raised by the deal. FEC records show that neither Qualcomm's employees nor its PAC have been big donors to Cornyn.

That's where Qualcomm comes in. 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 $117 billion would have been considered outside the preview of a federal agency - Committee on Foreign Investment in the US (CFIUS) - that reviews foreign deal.

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Most analysts assume Broadcom will now walk away from Qualcomm, with some flagging San Jose-based Xilinx Inc and Israel's Mellanox Technologies Ltd, both diversified makers of communications chips, as likely next targets.

Earlier this month, the Committee on Foreign Investment in the United States, which reviews the national security implications of foreign investments in USA companies, cited concerns about the proposed Broadcom-Qualcomm marriage.

Broadcom had planned since previous year to relocate its legal headquarters to the United States, avoiding the need for a CFIUS review. However, Broadcom had already committed to redomiciling its business to the US, and confirmed this week that it would do so by April 3. It proved to be too little, too late.

On Monday, Trump issued a rare order blocking the deal in an attempt to curb China's progress in the global technology race.

Broadcom's access to the president may have led it to underestimate what was needed to win the approval process. Late last week, the company signed S-3 Group, a Republican-allied public affairs and lobbying firm, to help bolster its case, according to a person familiar with the matter.

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