Tech sector tumbles after the Broadcom-Qualcomm deal is blocked

A failed merger between Qualcomm and Broadcom has some investors worried about the Trump administration’s tougher rhetoric on China.

“While most tech names including FANG stocks are relatively insulated from any China worries/headwinds, this is enough of a near term concern for tech investors to take some profits after a golden run over the last few weeks with many of these names making new highs,” GBH Insights’ Dan Ives told CNBC.

National security concerns cited as rationale for blocking the deal boil down to a fear of Chinese companies entering U.S. telecommunications markets and beating the U.S. to develop a 5G mobile wireless network.

Though Broadcom is based in Singapore and is in the process of redomiciling to the U.S., the Treasury Department has said, “China would likely compete robustly to fill any void left by Qualcomm as a result of this hostile takeover.”

The blocked merger could indicate more severe barriers to China to come from the executive branch, analysts said.

Trump last week raised tariffs on steel and aluminum imports, heightening concerns of a trade war with China.

“The worry is with the … Broadcom blockage from the Trump administration that this will add fuel to the fire in a battle vs. China on the horizon over the coming 12 to 18 months,” Ives said.

Source link

Leave a Reply

Your email address will not be published. Required fields are marked *