SINGAPORE-BASED CHIPMAKER Broadcom has confirmed that it will abandon plans to buy long-term rival Qualcomm after US president Donald Trump vetoed the potential acquisition.
Broadcom said it was "disappointed" with the outcome but had no choice to drop its plans to acquire Qualcomm along with its attempts to appoint nominees to the chipmaker's board.
At the start of the week, Trump said the US government would block the deal, set to be the largest in technology history, after "credible evidence" showed that the merger "threatens to impair the national security of the US".
He didn't elaborate, but last week the Committee on Foreign Investment in the United States (CFIUS) warned that a deal, if successful, could lead to China becoming dominant in the development of 5G, which "would have substantial negative security consequences for the United States."
Broadcom hit back, however, saying it "strongly disagrees that its proposed acquisition of Qualcomm raises any national security concerns".
In a statement, Treasury Secretary Steve Mnuchin supported the US government's decision, noting that the "decision is based on the facts and national security sensitivities related to this particular transaction only.
He added the government is not trying to "make any other statement about Broadcom or its employees, including its thousands of hard-working and highly skilled US employees."
Despite hitting back at the US gov block, Broadcom had struggled to finalise a deal with Qualcomm anyway, with the latter claiming that Broadcom's bids Broadcom claiming they "undervalued" the company and its "leadership position in mobile technology".
Broadcom continued to insist on an acquisition and had planned to replace much of Qualcomm's board in a bid to sway the decisionmaking process. This included the opening of new headquarters in the US, but officials had said that this would put the country's security in danger.
The firm added that it will "continue to move forward with its re-domiciliation process" and will "comply" with the US government's decision and will still hold its special stockholders' meeting on 23 March. µ
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