Here are the reasons why the Broadcom-Qualcomm deal was blocked by Trump - chaprama | Insights from the world of Technology and Lifestyle


Wednesday, March 14, 2018

Here are the reasons why the Broadcom-Qualcomm deal was blocked by Trump

All the buzz around the tech deals in the US is a bit messy to understand. Over the weekend, a news emerged that Intel was looking to buy Broadcom, which is dealing with Qualcomm, which in turn wanted to acquire NXP. However, Broadcom-Qualcomm deal was until one step ahead. The Broadcom-Qualcomm deal if went through, it would have been the largest ever tech deal in the world, which values for $117 billion. Donald Trump, stating national security reasons, blocked the Broadcom's takeover bid for Qualcomm. 

Here are the reasons why the Broadcom-Qualcomm deal was blocked by Trump

Reasons behind the break of Broadcom-Qualcomm deal

1) Trump was acting on the recommendations set by the Committee on Foreign Investment in the U.S (CFIUS), which stated that there would be a threat to the US security if the deal is put forward. 

2) The agency affirmed that the deal could lessen US investments in 5G technology that would dwindle the US in capturing 5G technology. 

3) Lesser spending on 5G technology would bring gains to the Chinese players like Huawei and ZTE, which are the leading players in data transmission and network security and on top of these, Huawei's spending on 5G is over and above to what Broadcom and Qualcomm are spending currently. CIFUS is concerned that Broadcom would cut Qualcomm's 5G expenditure that would directly favour Chinese companies.

4) Huawei and Broadcom are already working together on developing a cutting-edge 5G technology. Huawei uses Broadcom's chips in networking products like the switches that direct the traffic between the connected computers. The two companies on Feb 21, announced that they had completed testing 5G technology.

5) This means that the wireless carriers in the US would be forced to use Huawei's gear, which cannot be accepted by the US government. 

6) Trump wants the US to take lead over China when it comes to 5G. He wanted to take care of the competition within the United States and the tech companies to grow stronger.

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