Broadcom to Redomicile to USA by April 3

QUALCOMM, Inc. (QCOM): Trump's Interruption Likely to Have Significant Negative Ramifications

In a statement to Observer, Broadcom said it is reviewing the executive order and "strongly disagrees that its proposed acquisition of Qualcomm raises any national security concerns".

It would have been the most valuable tech takeover in the world had it gone ahead. The deal also was doomed by an activist CFIUS that has recently moved to block a number of cross-border technology deals, including German chip maker Infineon Technologies proposed $850 million deal past year to acquire Cree Inc.'s RF components unit.

"The proposed takeover of Qualcomm by the Purchaser is prohibited, and any substantially equivalent merger, acquisition, or takeover, whether effected directly or indirectly, is also prohibited", the order said.

Broadcom's Singapore connections complicated matters, even though the company maintained its physical headquarters in Silicon Valley and virtually all of its shareholders are in the U.S. It said: "given well-known USA 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".

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

As of now, it is not clear if such a move from the Singapore-based company will win Trump's approval.

Last month, top officials from the FBI, CIA, NSA and three other intelligence agencies publicly warned American consumers against using Huawei smartphones, citing concerns over the company's possible ties to the Chinese government. The frosty reception it has received from U.S. legislators only looks set to grow.

However, neither Huawei nor other Chinese tech companies have taken any active part in Broadcom's acquisition talk with Qualcomm. The merger would have created a very large competitor for the USA chipmaker.

Qualcomm and Broadcom both are leaders in the mobile market, and both rapidly expanding their portfolios to power the emerging Internet of Things (IoT).

"While the United States remains dominant in the standards-setting space now, China would likely compete robustly to fill any void left by Qualcomm as a result of this hostile takeover".

More recently, it has announced the launch of the 5G Pioneer Initiative with Lenovo, Oppo, ZTE, Vivo, Xiaomi and Wingtech to develop advanced mobile devices.

Aside from Qualcomm and Broadcom, there are two other manufacturers that are no doubt following this development with interest.

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.

A bigger question, though, it what might happen to Qualcomm.

According to the Wall Street Journal report, Intel has been working with advisors since a year ago to see how it can make this move.

Any resolution of that dispute would leave Apple as the main holdout, arguably posing the greatest risk to the ongoing health of Qualcomm's profit-driving licensing business. Earlier this month, the committee branded the proposed deal a potential security risk that could hobble the U.S.'s ability to make the smooth and quick transition to 5G.

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