nsucurrent.com March 22, 2018

US President signs order blocking Broadcom from buying Qualcomm

14 March 2018, 12:22 | Colleen Roy

Getty Images

Getty Images

President Trump's order to block Broadcom from taking over Qualcomm was a step to protect American companies from foreign competition, Stephen Hadley, former national security advisor for President George W. Bush told FOX Business.

The proposed landmark deal between two of the world's largest chipmakers would have likely been the largest takeover in tech history, but according to a presidential order released on Monday, there was evidence that Broadcom "might take action that threatens to impair the national security of the United States". Those are not words regularly used about the Trump administration.

The deal was under scrutiny by a national-security panel called the Committee on Foreign Investment in the United States, or CFIUS, which advises Trump.

"Qualcomm Incorporated today received a Presidential Order to immediately and permanently abandon the proposed takeover of Qualcomm by Broadcom Limited", the company said.

The cancellation has deep ramifications for the entire tech sector, especially since the Administration's reason for it was fear of China taking vital US technology from a Singapore company.

Although its name isn't widely known outside the technology industry, Qualcomm is one of the world's leading makers of the processors that power many smartphones and other mobile devices. These chipsets enable connected cars to speak to each other as well as stoplights.

Xilinx and Mellanox would be a good fit for Broadcom, though not as a transformational level like Qualcomm. Hours later, Trump issued his order.

While the key terms being used to temporarily put a halt to the deal were National Security concerns, other matters included the US military and entities having to make use of Huawei equipment in the future should the deal have gone through. And several other technology deals fell apart, after CFIUS raised concerns. In September, he blocked the sale of Lattice Semiconductor Corp to a Chinese-backed investor.

Although Broadcom is based in Singapore, China loomed large over the United States government's fears about a foreign takeover of chipmaker Qualcomm. It had previously promised to invest in 5G R&D should the deal go ahead. CFIUS did not provide details on the matter. "If there is one lesson here, it's don't screw with the government", the person said.

This is something that Trump and his team clearly took into account with the latest executive order. "It smacks of anger on the part of the government to me".

Broadcom's hostile Qualcomm takeover plans hit a massive wall on Monday: Trump.

While Broadcom was extremely interested in snapping up Qualcomm, the San Diego-based Qualcomm had already declined bids from the company.

Qualcomm is now a global leader in the 5G field. Once deployed, a high-definition movie could load instantly on a smartphone.

If that, and a reduced flow of investment dollars, was a effect of the tie up it could be seen as a threat to America's position at, or close to, the top of the global tech charts in the midst of a cut throat race to develop, and sell, 5G wireless technology. Bloomberg technology reporter Ian King said the move by Trump was "very sudden" and that he felt that there hasn't been "a very deep or long running investigation" at the White House.

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