"Broadcom strongly disagrees that its proposed acquisition of Qualcomm raises any national security concerns", the company said in a statement. At the same time, the company would not "fly" past the boom of devices connecting to the Internet via 4G and 5G - in chips for them and a strong Qualcomm.
"There is credible evidence ... that Broadcom ... through exercising control of Qualcomm ... might take action that threatens to impair the national security of the United States", the order explains.
The Committee on Foreign Investment in the United States (CFIUS), which raised concerns about the Qualcomm deal with Trump, listed the highly leveraged nature of Broadcom's bid for its larger rival as a major concern coupled with the risk of the US losing mobile technology leadership. Additionally, the presidential order also disqualifies all of Broadcom's proposed directors for Qualcomm.
Broadcom has been aggressively bidding to take over Qualcomm for its chipmaking segment.More news: Serena sets up Indian Wells showdown with sister Venus
Before this ban, a US President has only blocked deals on the recommendation of CFIUS four times.
It now appears that Broadcom will have to cut its losses and has few, if any, avenues to pursing Qualcomm. For instance, Qualcomm is viewed as being ahead of the curve in the development of next-generation 5G wireless technology, and the USA government likely thinks that ceding control to Broadcom could allow Chinese companies such as Huawei to become leaders in this crucial space going forward.
Intel is the world's second largest chip maker, however, if Broadcom were successful in its bid for Qualcomm, then the company would be faced by a massive threat in the newly created giant. Well, now it doesn't need to bother, thanks to an even bigger fish: Citing national security concerns, the president of the United States has signed an executive order blocking the acquisition.
Broadcom meanwhile is working to address the concerns that its acquisition will pose a security risk.More news: Chch Airport welcomes testing of autonomous air travel
Qualcomm shareholders were set to vote last week on whether to replace six of its 11 directors with Broadcom candidates when the CFIUS delayed the scheduled board meeting to review the takeover.
Broadcom is in the process of moving its legal headquarters from Singapore to the US, with the company planning on finishing the move by April 3, 2018. However, to boost its acquisition offer, Broadcom lately has worked on putting supportive members on Qualcomm's board. Broadcom, for its part, tried to circumvent the opposition by shifting its corporate headquarters from Singapore to the United States, which would make it a U.S. company and no longer subject to CFIUS's overview.
As of now, it is not clear if such a move from the Singapore-based company will win Trump's approval. "As the State Department Web site notes, the United States and Singapore have long enjoyed 'an expansive and enduring relationship based on mutual economic interests, robust security and defense cooperation.' When the president comes to San Diego on Tuesday, an explanation of his decision is needed - not just by residents but by nations that see themselves as US allies". Last September, he blocked the sale of Hillsboro, Ore. -based Lattice Semiconductor (LSCC) to Canyon Bridge Capital Partners, which has ties to a fund owned by the Chinese government.More news: Vikings Reach Out To QB Drew Brees