What’s Donald Trump got to do with Broadcom’s Qualcomm takeover?

By : |March 13, 2018 0

Broadcom’s interest in Qualcomm has sparked concerns about national security leading to an executive order blocking any merger of the chipmaking giants.

The US President, Donald Trump said in his order that “there is credible evidence” leading him to believe that Broadcom’s control of San Diego-based Qualcomm “might take action that threatens to impair the national security of the United States.”

“The proposed takeover of Qualcomm by the Purchaser is prohibited, and any substantially equivalent merger, acquisition, or takeover, whether effected directly or indirectly, is also prohibited,” the executive order, signed by Trump, said. The order also said that Broadcom’s 15 proposed candidates to Qualcomm’s board of directors have been “disqualified”.

Broadcom has been eyeing Qualcomm for the last several months, but has continually been rebuffed. According to many media reports, in an unprecedented move, Qualcomm’s board secretly asked Committee on Foreign Investment in the United States (CFIUS) to review the bid.

Broadcom attempted to avoid CFIUS by re-domiciling to the US, announcing that it would complete the transition by April 3. But looks like, Trump trumped Broadcom by issuing the order faster.

Trump’s blocking the proposed deal underscores his continual push to “put America first” in trade negotiations with global partners. In recent weeks, the President has turned to an arsenal of tools — including tariffs and an obscure government review panel — to ward off foreign control in American industries and, in particular, thwart the rise of China.

There were concerns the takeover could have led to China pulling ahead in the development of 5G wireless technology. The deal would have been the biggest technology sector takeover on record.

Broadcom said in a statement that it “strongly disagrees that its proposed acquisition of Qualcomm raises any national security concerns.”

While Broadcom is based in Singapore, China was the main concern that drove Trump’s decision over the Qualcomm deal, because allowing an American technology company to be acquired would cede its primacy in the semiconductor and wireless industry.

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