U.S. President Donald Trump has blocked the transaction through which Broadcom was supposed to buy Qualcomm and the reason for this is national security concerns. The $140 billion transaction would have been one of the biggest transactions on the IT market.
According to market analysts, the takeover of Qualcomm by Broadcom would have generated the appearance of the third biggest processors manufacturer in the world, after Intel and Samsung. There were concerns in the U.S. Government that the transaction might have helped China in developing the 5G wireless technology.
The industry is now in a race to build chips for the 5G wireless technology and Qualcomm is the leader on this niche, followed by Broadcom and Huawei.
Analysts say that Qualcomm is a very appreciated company thanks to the company’s commitment to research and development, especially concerning the 5G technology.
Broadcom is known for sales and growth through acquisitions, being considered less advanced in what research and development are concerned.
Considering this, analysts say that an agreement between Qualcomm and Broadcom would have provided Huawei – a Chinese company – with the opportunity of becoming a market leader for the next few days, a situation the U.S. Government wanted to prevent as the Government is interested in Chinese communications companies doing business with American businesses.
Market analysts claim that Donald Trump’s decision was more about making things competitive and not because he was too much worried about national security.
“Considering the current political climate in the United States and other regions in the world, everybody has a more conservative vision about mergers and acquisitions, trying to protect their own fields” Mario Morales, Vice President for Technology at IDC.
On a similar note, we also learned that Intel plans to buy Broadcom.