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Broadcom takeover bid blocked as China/U.S. trade tensions mount

by | 13 Mar, 2018

A Broadcom chip sits inside a ‘Raspberry Pi’ Model B

In another move to protect ‘national security’ after his order on steel and aluminium import tariffs, President Trump has blocked semi-conductor firm Broadcom’s $117 billion bid to buy Qualcomm.

The Committee on Foreign Investment in the U.S. that investigated the takeover said it was worried Broadcom could undermine research and development at Qualcomm, given its reputation for its cost-cutting approach.

There were worries that the takeover could have led to China pulling ahead in the development of 5G wireless technology. The Republican administration already performed a similar action in September last year when it blocked a Chinese purchase of Lattice Semiconductor – an Oregon-based company. The more recent decision comes at a time of strained relations between the U.S. and China in trade terms. Soon after steel and aluminium import tariffs went ahead, Trump Tweeted that American authorities would be pushing ahead to combat China’s record of intellectual property theft from U.S. tech companies.

Qualcomm and Broadcom stock prices may be volatile when the U.S. market opens today. Shares in Qualcomm already fell 5 percent in pre-market trading.

In other news from Washington, a former employee of the Reagan administration Larry Kudlow is being tipped to replace Gary Cohn as a Chief economic adviser. Elsewhere Trump has been (partly) vindicated over accusations of Russia collusion, after U.S. House Intelligence Committee Republicans said they had finished investigating Russia and the 2016 election and found ‘no collusion’ between the Trump campaign and Moscow’s efforts to influence the vote.

Democrats including Adam Schiff accused the Republicans of shirking the investigation in order to protect the President.

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ALL RIGHTS RESERVED © INVSTR LTD. 2018

Risk Disclosure:
Invstr is a technology platform, not a registered broker-dealer or investment adviser. Invstr does not offer its own recommendations of any security or provide its own research to any user regarding any security transaction or order.
Please note, investing involves risk and investments may lose value. Past performance does not guarantee future results.
Brokerage services are provided by the following:
US-traded securities, including fractional trading, are provided to Invstr users by DriveWealth LLC, a regulated member of FINRA/SIPC. DriveWealth may not establish investment accounts to residents of certain jurisdictions. For more information, including disclaimers, risk and transaction fees click here.
India account traded securities are provided by SIC Stocks & Services PVT Ltd. SIC does not make any personal recommendations to buy, sell or otherwise deal in investments. Investors make their own investment decisions. The services and securities provided by SIC may not be suitable for all customers and, if you have any doubts, you should seek advice from an independent financial adviser. For more information and disclaimers, click here.

 

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