President Donald Trump has ordered the blocking of a planned takeover of chipmaker Qualcomm by Singapore-based rival Broadcom on national security grounds.
The president’s order cited “credible evidence” that the proposed $140 billion deal “threatens to impair the national security of the US”.
There were concerns the takeover could have led to China pulling ahead in the development of 5G wireless technology.
The $140 billion deal would have been the biggest technology sector takeover on record.
According to analysts, a takeover of Qualcomm by Broadcom would have created the world’s third-largest maker of microchips, behind Intel and Samsung.
The chipmaking sector is in a race to develop chips for the latest 5G wireless technology and Qualcomm is considered to be a leader in this field, followed by Broadcom and China’s telecoms giant Huawei.
Qualcomm is highly regarded for its commitment to research and development (R&D), particularly in the field of 5G technology. Huawei is equally committed to R&D in the area.
Broadcom is better known for selling assets and growing through acquisitions, and deemed to be weaker on R&D.
Analysts also say a deal between Qualcomm and Broadcom could have given Huawei the chance to take over the top spot in years to come – a situation US politicians wanted to prevent given their ongoing security concerns around Chinese telecom firms doing business with US carriers.
Broadcom said it was reviewing the order and “strongly disagrees that its proposed acquisition of Qualcomm raises any national security concerns”.
The company had been pursuing San Diego-based Qualcomm for about four months.
Last week, however, Broadcom’s hostile takeover bid was put under investigation by the Committee on Foreign Investment in the US (CFIUS), a multi-agency body led by the Treasury Department.
Broadcom had rejected approaches from its rival on the grounds that the offer undervalued the business, and also that any takeover would face antitrust hurdles.
Qualcomm has unveiled the Snapdragon Sense ID 3D Fingerprint Technology – a new type of fingerprint sensor said to be able to read prints through glass, metal and plastic smartphone covers – at this year’s Mobile World Congress (MWC).
The Snapdragon Sense ID 3D Fingerprint Technology is the latest product from the chipmaker.
Qualcomm says its ultrasonic sound wave-based solution can scan through sweat, hand lotion and condensation.
Experts say it has the potential to outclass Apple’s Touch ID.
However, they add that Qualcomm needs to provide more data before the two technologies can be properly compared.
Qualcomm said that its sensor works by using sound waves to penetrate the outer layers of the user’s finger.
The information gathered is then used to create a surface map of the person’s skin including the ridges of their fingerprints and sweat pores.
By contrast, Apple and others use capacitive sensors – which make use of the human body’s electrical properties – to take high-resolution scans of sub-epidermal skin below the outer layer of a user’s finger.
Qualcomm suggests its method is superior because it scans through both contaminants and smartphone covers.
“Snapdragon Sense ID 3D Fingerprint Technology’s unique use of ultrasonic technology revolutionizes biometrics from 2D to 3D, allowing for greater accuracy, privacy and stronger authentication,” said Raj Talluri, a Qualcomm executive.
Qualcomm is pitching its forthcoming component to manufacturers as part of a chipset package that would also include its processors.
The launch at MWC comes a day after Samsung confirmed that its latest Galaxy S6 phones would exclusively use its own Exynos chips.
Qualcomm’s Snapdragon processors had featured in versions of Samsung’s past flagship handsets.
The US chipmaker has also suffered other setbacks recently including a $975 million fine by China’s competition regulator and news that a South Korean watchdog is also investigating whether it abused a dominant position by demanding too much money for its 3G and 4G wireless chip technologies.
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