Trump Prohibits Broadcom's Takeover of Qualcomm Due to National Security Concerns [Updated]

[MacRumors]

United States President Donald Trump this afternoon issued an executive order blocking Broadcom from acquiring Qualcomm in a deal that would have been worth more than $117 billion, reports Bloomberg.

The president's order came following a recommendation from the Committee on Foreign Investment (CFIUS) in the United States, despite Broadcom's efforts to save the proposed transaction over the course of the last few weeks. U.S officials believed Broadcom's acquisition of Qualcomm, which has been under investigation by the CFIUS, could threaten national security.

The CFIUS previously said that a Broadcom acquisition of Qualcomm could undermine Qualcomm's leadership in 5G wireless technology, allowing China's Huawei to become the dominant 5G provider in the world. Broadcom, a Singapore-based company, promised not to sell Qualcomm 5G assets, announced plans to redomicile in the United States, and pledged to invest billions in the United States, but that did not ease regulators' concerns.

"There is credible evidence that leads me to believe that Broadcom Ltd." by acquiring Qualcomm "might take action that threatens to impair the national security of the United States," Trump said in the order released Monday evening in Washington.

Trump also said that "any substantially equivalent merger, acquisition, or takeover, whether effected directly or indirectly, is also prohibited."

Broadcom first made an offer to acquire Qualcomm for $70 per share in cash and stock back in November of 2017, marking the proposal of the "largest technology acquisition ever, which Qualcomm turned down.

Qualcomm also turned down subsequent offers of $121 billion and $117 billion, and had not agreed to the acquisition at the time that it was blocked by Trump. Broadcom had been attempting to add merger-friendly individuals to Qualcomm's board, but today's order makes it clear that no merger or acquisition between the two companies will be allowed.

Broadcom may intend to fight the order as earlier today, the company said in a statement that U.S. national security concerns are not a risk as "Broadcom never plans to acquire Qualcomm before it completes redomiciliation.

Update: Broadcom released a statement following Trump's order: "Broadcom is reviewing the Order. Broadcom strongly disagrees that its proposed acquisition of Qualcomm raises any national security concerns."

Update 3/14: Broadcom has officially ended its bid for Qualcomm in the wake of Trump's executive order: "Although we are disappointed with this outcome, Broadcom will comply with the order."

Note: Due to the political nature of the discussion regarding this topic, the discussion thread is located in our Politics, Religion, Social Issues forum. All forum members and site visitors are welcome to read and follow the thread, but posting is limited to forum members with at least 100 posts.

Article Link: Trump Prohibits Broadcom's Takeover of Qualcomm Due to National Security Concerns [Updated]

 

[VulchR]

Probably a reasonable decision, but ironic coming from Trump's White House.

 

[CWallace]

Wonder how the Administration feels about Intel making a play for Broadcom, as some analysts have rumored.

 

[Analog Kid]

Someone apparently explained that "national security" is the presidential equivalent of "Simon says"... We're going to be seeing more of this strategy, I'm sure.

 

[nutmac]

If the merger did go through, I wonder how that would impact Broadcom's relationship with Apple. Apple seems to be steering away from relying on Broadcom components (WiFi is now house designed), but the relationship isn't hostile like it is with Qualcomm.

 

[samcraig]

So torn.

On one hand - probably a good decision.

Which leads me to the other hand - with Trump, you almost always have to assume an ulterior motive.

 

[B4U]

They first attempted to hurt the auto industry by imposing the tariff to steel and aluminum, and now this...?

 

[BMcCoy]

Clearly more to this story than we are being told..

Easy to highlight the pros and cons of this “takeover”.
Less easy to evaluate the impact of blocking the process on Qualcomm’s future/jobs/global standing/economic position/confidence.

Opinions will correlate with your position and perspective.

 

[Quu]

Good decision. More consolidation is not a good thing.

 

[CWallace]

If the merger did go through, I wonder how that would impact Broadcom's relationship with Apple.

Many (if not most) analysts believe that Broadcom would revise Qualcomm's royalty structure to make it far less expensive for companies like Apple in order to maintain their relationship with Apple.

 

[fairuz]

So torn.

On one hand - probably a good decision.

Which leads me to the other hand - with Trump, you almost always have to assume an ulterior motive.

Only with the publicity stunts. Like when he's telling everyone about the soldiers' families he contacted or trying to make news sources look illegitimate.

 

[KmanOz]

You wanna know how smart China is. 35 years ago Shenghen was farmland. They created a special economic zone, allowed the likes of HP et all to start manufacturing there, copied their technology and 35 years later it has 15M people living there and is arguably one of their most important cities from a tech stand point. If technology companies didn't go there it would still be farmland. They are great at imitating not innovating. They may have caught up at some stage, but there would have been a large gap that was closed very quickly because they had access to technology & R&D that they didn't have.

 

[IWantItThatWay]

They first attempted to hurt the auto industry by imposing the tariff to steel and aluminum, and now this...?

Is China going to become an economic super power?

 

[Dave-Z]

I thought it was the Trump administration that was a threat to national security.

 

[mariusignorello]

Gotta love the decision but hate because Trump did it. You guys are absolutely pathetic.

 

[x0vash0x]

Is China going to become an economic super power?

Yes? America is shooting itself in the foot with isolationist trade practices. The Chinese will gladly trade with EU or Russia or Australia or anyone else. China has pretty good trade relations with the rest of the world. Keeping China as a frenemy is good to stoke fears, but does nothing to change the long term path of The Rise of China.

This is Cold War mentality and nothing more.

 

[iReality85]

Clearly more to this story than we are being told..

Easy to highlight the pros and cons of this “takeover”.
Less easy to evaluate the impact of blocking the process on Qualcomm’s future/jobs/global standing/economic position/confidence.

Opinions will correlate with your position and perspective.

It was shaping up to be a hostile takeover with US technology on the line. This article completely obfuscates Broadcom’s board candidates as “merger-friendly”; Broadcom was looking to replace Qualcomm’s board with it’s own candidates, who of course would be friendly to Broadcom which has links to China. It was enough for the US Treasury to be become alarmed, given that Qualcomm has so many communications patents and will be deploying 5G in the coming year.

 

[IWantItThatWay]

Yes? America is shooting itself in the foot with isolationist trade practices. The Chinese will gladly trade with EU or Russia or Australia or anyone else. China has pretty good trade relations with the rest of the world. Keeping China as a frenemy is good to stoke fears, but does nothing to change the long term path of The Rise of China.

This is Cold War mentality and nothing more.

How is this possible?

- China has massive tariffs
- Unlike the USA, China has a real authoritarian leader
- China is very nationalist
- China is homogeneous and known for it's wall. I think it's called the "Big Wall" or the "Good Wall?"

So how can this be?!?!?!?!?! Was I lied to?

 

[cube]

More than a security risk, this looks like the US wanting to have control over technology.

If they had just said "it would be too big", no complaints.

Maybe now the EU will block the sale of NXP to Qualcomm.

 

[Cloudkicker]

What Russian business will being buying Qualcomm soon? How much money will Trump & cronies make short-selling its stock? If he had been forced to show his taxes, I sincerely am sure he wouldn't have been elected. Nice move selfish Trump voters making over $100,000 a year. They knew what they doing. Also, nice move dolt Trump voters making less than that... you let a conman torpedo your country. Hello, from Canada.

 

[IWantItThatWay]

More than a security risk, this looks like the US wanting to have control over technology.

If they had just said "it would be too big", no complaints.

Maybe now the EU will block the sale of NXP to Qualcomm.

When the USA does it - BAD.

When others do it - GOOD.

This is one of the reasons Trump was elected. Tired of hypocrites telling the USA what to do.

 

[cube]

When the USA does it - BAD.

When others do it - GOOD.

This is one of the reasons Trump was elected. Tired of hypocrites telling the USA what to do.

The USA has massive control over tech.

 

[IWantItThatWay]

The USA has massive control over tech.

And?

It's like people getting all worked up when the USA may do tariffs yet people say "Keeping China as a frenemy is good to stoke fears, but does nothing to change the long term path of The Rise of China" when China has INSANELY high tariffs.

 

[cube]

And?

It is not the same clenching to control as avoiding further domination.

 

[IWantItThatWay]

It is not the same clenching to control as avoiding further domination.

Europe's biggest phone company was Nokia and got crushed. Canada's biggest phone company RIM got crushed. Samsung only became relevant by ripping off Apple.

There's a reason the USA is number 1.