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You are here: Home / Computing / Trump Blocks Qualcomm Takeover
President Blocks Broadcom's Plan To Take Over Qualcomm
President Blocks Broadcom's Plan To Take Over Qualcomm
By Shirley Siluk / Sci-Tech Today Like this on Facebook Tweet this Link thison Linkedin Link this on Google Plus
Shortly after President Donald Trump blocked chipmaker Broadcom's planned hostile takeover of rival Qualcomm last night, Broadcom said it "strongly disagrees" with that decision and is reviewing the president's order. Estimated at a value of $117 billion, the Broadcom-Qualcomm deal would have been the largest yet in the tech industry.

Citing national security concerns voiced by the U.S. Department of the Treasury's Committee on Foreign Investment in the United States (CFIUS), the White House yesterday prohibited any takeover, acquisition, or merger bid for Qualcomm by Broadcom. Yesterday morning, Broadcom said it was speeding up its planned redomiciliation from Singapore to the U.S. from May 6 to April 3 in expectation of the planned takeover.

Last night's presidential order marked the latest twist in President Donald Trump's "America First" strategy, which has also seen the White House impose tariffs on imports of foreign steel and aluminum, and block a China-connected company's planned acquisition of U.S.-based Lattice Semiconductor on national security grounds.

Concerns about Chinese Influence on 5G

The CFIUS had concluded that Broadcom's proposed takeover of Qualcomm could pose a risk to the national security of the U.S., the Treasury Department said in a letter last week. The letter cited concerns about Qualcomm's research and development efforts in 5G connectivity, and the potential that any weakening of those efforts "would leave an opening for China to expand its influence on the 5G standard-setting process."

In addition to blocking Broadcom's takeover efforts, yesterday's presidential order also blocked 15 Broadcom nominees from standing for election as Qualcomm directors. Qualcomm has scheduled its annual stockholders meeting for March 23.

The order further requires both Broadcom and Qualcomm to certify with the CFIUS that the takeover effort has been terminated, and to provide details with "a timeline for projected completion of remaining actions."

Mixed Reactions to Decision

Yesterday's White House order strikes a blow for Broadcom, whose CEO Hock Tan appeared with the president in the White House in early November to jointly announce the company's plan to redomicile to the U.S. But the order is likely to be welcomed by chipmaking giant Intel, which was reportedly worried about how the merger of Broadcom and Qualcomm could have threatened its own position in the smartphone processor and data center markets.

Smartphone buyers would also have likely been affected by the takeover, which would have further consolidated the global market for smartphone chips and could have led to increased prices.

The order quashing the Broadcom-Qualcomm deal is being met with a wide range of reactions. On Twitter this morning, California Rep. Susan Davis (D, 53rd District) said the decision was "good for San Diego, our regional economy, and national security. The importance of @Qualcomm's research into 5G technology and how it relates to our future cannot be understated."

However, while acknowledging that national security concerns about the deal were "defensible," the San Diego Union-Tribune in an editorial today questioned whether other motivations also played into the decision.

"[I]f the decision was prompted by Trump's deep skepticism about international trade and Fortress America instincts, that is less defensible and could haunt U.S. companies in their international dealings," according to the editorial. "As the State Department Web site notes, the United States and Singapore have long enjoyed 'an expansive and enduring relationship based on mutual economic interests, robust security and defense cooperation.' When the president comes to San Diego on Tuesday, an explanation of his decision is needed -- not just by residents but by nations that see themselves as U.S. allies."

Image credit: iStock/Artist's concept.

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