President Trump halts Broadcom takeover of Qualcomm

March 12 (Reuters) - U.S. President Donald Trump issued an order on Monday prohibiting semiconductor maker Broadcom Ltd's proposed takeover of Qualcomm Inc on grounds of national security, bringing an end to what would have been the technology industry's biggest deal ever.

Qualcomm had rebuffed Broadcom's $117 billion takeover bid, which was under investigation by the U.S. Committee on Foreign Investment in the United States (CFIUS), a multi-agency panel led by the U.S. Treasury Department that reviews the national security implications of acquisitions of U.S. corporations by foreign companies.

"The proposed takeover of Qualcomm by the Purchaser (Broadcom) is prohibited, and any substantially equivalent merger, acquisition, or takeover, whether effected directly or indirectly, is also prohibited," the presidential order released on Monday said.

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A building on the Qualcomm campus is seen, as chip maker Broadcom Ltd announced an unsolicited bid to buy peer Qualcomm Inc for $103 billion, in San Diego, California, U.S. November 6, 2017. REUTERS/Mike Blake
A sign to the campus offices of chip maker Broadcom Ltd, who announced on Monday an unsolicited bid to buy peer Qualcomm Inc for $103 billion, is shown in Irvine, California, U.S., November 6, 2017. REUTERS/Mike Blake
A sign on the Qualcomm campus is seen, as chip maker Broadcom Ltd announced an unsolicited bid to buy peer Qualcomm Inc for $103 billion, in San Diego, California, U.S. November 6, 2017. REUTERS/Mike Blake
A Qualcomm Inc. baseband modem integrated circuit (IC) chip, bottom, of an Apple Inc. iPhone 6 smartphone is seen in an arranged photograph in Bangkok, Thailand, on Saturday, Feb. 3, 2018. Apple Chief Executive Officer Tim Cook told shareholders on Feb. 13 at the company's annual meeting to expect higher dividends and stressed that succession planning is a priority. Photographer: Brent Lewin/Bloomberg via Getty Images
Signage is displayed outside of Broadcom Ltd. headquarters in Irvine, California, U.S., on Monday, Nov. 6, 2017. Broadcom Ltd.�and its advisers are gearing up for a proxy battle, making an appeal directly to shareholders, should�Qualcomm Inc. reject its $105 billion takeover offer, according to a person with knowledge of the matter. Photographer: Patrick T. Fallon/Bloomberg via Getty Images
IRVINE, CA, THURSDAY, MAY 28: Broadcom Corp. offices are shown May 28, 2015 in Irvine, California. The company has agreed to be acquired by Avago Technologies Inc. for $37 billion in cash and stock, creating a giant in the business of supplying the technological infrastructure behind a range of common products, from smartphones to wireless networks to cloud computing. (Photo by Robert Gauthier/Los Angeles Times via Getty Images)
IRVINE, CA, THURSDAY, MAY 28: Broadcom Corp. offices are shown May 28, 2015 in Irvine, California. The company has agreed to be acquired by Avago Technologies Inc. for $37 billion in cash and stock, creating a giant in the business of supplying the technological infrastructure behind a range of common products, from smartphones to wireless networks to cloud computing. (Photo by Robert Gauthier/Los Angeles Times via Getty Images)
A Broadcom Corp. Tomahawk chip is displayed for a photograph during a Bloomberg West Television interview in San Francisco, California, U.S. on Wednesday, Sept. 24, 2014. Broadcom's StrataXGS Tomahawk chipset is built on the company's widely deployed StrataXGS Trident and StrataDNX products and delivers 3.2Tbps switching capacity. Photographer: David Paul Morris/Bloomberg via Getty Images
An attendee passes the Broadcom Corp. pavilon on day two of the Mobile World Congress in Barcelona, Spain, on Tuesday, Feb. 25, 2014. Top telecommunication managers will rub shoulders in Barcelona this week at the Mobile World Congress, Monday, Feb. 24 - 27, a traditional venue for showcasing the latest products for dealmaking. Photographer: Angel Navarrete/Bloomberg via Getty Images
A red couch sits inside the lobby of Broadcom Corp.'s headquarters in Irvine, California, U.S., on Friday, April 12, 2013. Broadcom Corp. designs, develops, and supplies integrated circuits for cable set-top boxes, cable modems, high-speed networking, direct satellite and digital broadcast, and digital subscriber line. Photographer: Patrick Fallon/Bloomberg via Getty Images
Broadcom Corp. signage is displayed inside the lobby of the company's headquarters in Irvine, California, U.S., on Friday, April 12, 2013. Broadcom Corp. designs, develops, and supplies integrated circuits for cable set-top boxes, cable modems, high-speed networking, direct satellite and digital broadcast, and digital subscriber line. Photographer: Patrick Fallon/Bloomberg via Getty Images
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The order issued by the White House cited "credible evidence" that led Trump to believe that Broadcom taking control of Qualcomm "might take action that threatens to impair the national security of the United States."

This is the fifth time ever a U.S. President has blocked a deal based on CFIUS objections and the second deal Trump has stopped since assuming office.

Trump's move accelerated a decision that appeared likely after CFIUS told Broadcom in a letter on Sunday that its investigation "so far confirmed the national security concerns."

The U.S. Treasury Department letter was "obviously a poison pill," Jim Lewis, a CFIUS expert at the Center for Strategic and International Studies, said before the Trump order. He described the CFIUS communication to Broadcom as "unprecedented."

The semiconductor industry is racing to develop chips that power so-called 5G wireless technology, allowing the transmission of data at faster speeds.

San Diego-based Qualcomm has emerged as one of the biggest competitors to Chinese companies vying for market share in the sector, such as Huawei Technologies Co, making it a prized asset.

A source familiar with CFIUS' thinking had said that if the deal was completed, the U.S. military was concerned that within 10 years, "there would essentially be a dominant player in all of these technologies and that's essentially Huawei, and then the American carriers would have no choice. They would just have to buy Huawei (equipment)."

Broadcom had struggled to complete its proposed deal to buy Qualcomm which had cited several concerns including the price offered and potential antitrust hurdles. (Reporting by Diane Bartz and Chris Sanders in Washington; Supantha Mukherjee and Pushkala Aripaka in Bengaluru; Greg Roumeliotis in New York; Editing by Peter Henderson)

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