Trump decision on Qualcomm raises red flag on megadeals
Mar 14 2018 by Michele Stevens
It's all about China and 5G.
More so than previous iterations of wireless technology like 3G or 4G, as 5G technology is developed, "We're seeing China emerge and start to play a bigger role in the standards developing process", Erensen said.
Before Trump's order, Broadcom had planned to relocate its legal headquarters to the United States, avoiding the need for a CFIUS review.
But the United States is anxious that a takeover would dramatically reduce investment and research at Qualcomm, giving an advantage to China.
The requirement showed that CFIUS, an inter-agency panel led by the U.S. Treasury, was aware that its jurisdiction could be contested if Broadcom redomiciles to the United States. Broadcom's latest move was to try and get new members elected to the Qualcomm board of directors in order to try and take over the company from within.
"The case against the acquisition is inherently tied to the argument that the transaction could adversely impact US control of the pace and progress of the development of 5G technologies", he said.
Brent Iadarola, Frost & Sullivan's vice president of mobile and wireless communications, tells Channel Partners the administration's stance is distinctly based on national security sensitivities, so "I can't envision any scenario where this transaction is brought to fruition while Trump is in office".
Congress issued a critical report on the Chinese tech firm in 2012 that effectively shut it out of the USA market. Chinese regulators could just as easily block an American company from trying acquire a Chinese-based company over concerns for its own national security. European-based companies could do the same, too.
Other analysts flagged trade tensions with the USA as potential headwinds for China.
Huawei's involvement in 5G technology could be inevitable because of the global collaboration required to develop the networks.