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Broadcom ends bid for rival Qualcomm after Trump intervention

Matthew Field
Broadcom chief executive Hock Tan with US President Donald Trump last year, before the bid for Qualcomm - AFP

Chip-maker Broadcom has withdrawn its bid for rival Qualcomm, two days after US President Donald Trump declared he would block the $142bn (£104bn) deal.

Broadcom announced on Wednesday it had formally abandoned its hostile takeover bid for Qualcomm. The mammoth offer would have created a new giant in the $400bn semi-conductor industry in the tech sector's biggest ever deal.

Broadcom launched its bid in November and had been gathering support from investors to secure a deal. However on Monday Mr Trump stepped in, citing national security concerns.

"Although we are disappointed with this outcome, Broadcom will comply with the order," Broadcom said in a statement.

Mr Trump had said a takeover of San Diego-based Qualcomm by Singaporean Broadcom could pave the way for Chinese companies to gain dominance in the US telecoms sector. The Presidential order said: "Broadcom… through exercising control of Qualcomm, might take action that threatens to impair the national security of the United States".

San Diego-based Qualcomm had rebuffed the initial offer Credit: Reuters

Last week, the US government delayed a shareholder meeting at Qualcomm to allow for a review by the Committee on Foreign Investment in the United States (Cfius).

Broadcom is set to continue its plans to move its headquarters to the US under chief executive Hock Tan. The move had initially been welcomed by Mr Trump, although the bid for Qualcomm had been seen as a threat to the US telecoms industry and future investment in 5G infrastructure, where Qualcomm is committed to spending.

Although such a presidential intervention on a major deal is rare, the Trump administration has made a point of defending US microchip companies. It blocked a $1.3bn Chinese deal for Oregon’s Lattice Semiconductor, and forced Britain’s Imagination Technologies to sell off its US-headquartered division MIPS before the company was bought by a Chinese fund.