Trump's move to stall Broadcom bid for Qualcomm questioned

US President Donald Trump

The Treasury argued in its letter that any setback to Qualcomm's development of 5G technology could allow Chinese competitors like Huawei to gain ground.

In an extra-ordinary turn of events on Monday, President Donald Trump blocked Broadcom's $117 billion bid for Qualcomm citing it as a threat to national interest.

The end of the attempted acquisition also puts a stop to Intel's secret potential plan to acquire Broadcom if it looked like the company would buy Qualcomm.

According to the Wall Street Journal report, Intel has been working with advisors since previous year to see how it can make this move. No takeover discussions had been initiated and this is not one of the most likely outcomes, said the same sources.

That's not to say that an Intel acquisition would be ideal either, though.

Broadcom is a market leader in chips that control Bluetooth connections.

Qualcomm's dominance of baseband chips that connect phones to networks would have represented the crown jewel in Broadcom's portfolio of communications chips that supply wi-fi, graphics, video and networking features alongside baseband chips. The deal would make Broadcom the third-biggest maker of microchips, behind only Intel and Samsung.

To give an idea of Huawei's rising clout, the tech company past year posted sales of 600 billion yuan ($95 billion).

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The company's prospects in the largest Asian market have grown brighter just as its relations with its most important customer, Apple, have soured considerably over the chip giant's licensing practices.

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.

Broadcom has been aggressively bidding to take over Qualcomm for its chipmaking segment.

Qualcomm and Huawei have already conducted joint tests on 5G technology, and both companies are part of an global 5G alliance that includes Nokia, Ericsson and Intel.

Broadcom is in the midst of moving its headquarters to the USA and could possibly make another attempt at buying Qualcomm once it's officially based in America.

Qualcomm, however, said it will reconvene its annual stockholders meeting on March 23 to discuss the situation. Broadcom played its own game of carrot and stick, with an improved share price offer, but also offered its own proposed board of directors slate to shareholders in a move meant to launch a hostile takeover. And early signs showed that chances of all the 6 nominees getting elected very extremely high.

If Broadcom decides to step back from acquisitions, it could please investors by increasing its capital returns through dividends and share buybacks, Ellis said.

The intervention of the USCFI was a Godsend and has given the company a 30-day respite. Singapore-based Broadcom, on the other hand, disagrees with Trump's decision, saying its acquisition of Qualcomm does not pose any security risk. The Trump administration, which welcomed him to an event in the Oval Office in November to celebrate Broadcom's announcement of a return to the US, now appears to have sided with those who want to curb his influence and casts doubt on whether his career as a dealmaker in the USA can continue.

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