President Trump blocks Broadcom’s bid for Qualcomm claiming it raises “national security concerns”
President Trump has waded into the Broadcom/Qualcomm saga by submitting an order blocking the former’s multi-billion-dollar bid for the latter.
In a statement issued by the White House overnight, Trump said: “There is credible evidence that leads me to believe that Broadcom might take action that threatens to impair the national security of the United States.” In particular, there were concerns raised that the buyout could give China a competitive edge in the development of 5G wireless technology (despite the fact Broadcom is based in Singapore).
The deal – valued at $117 billion at the end of February – would have been the largest tech takeover on record putting Broadcom just behind Intel and Samsung in the race to be the world’s largest maker of microchips. In response to Trump’s order, Broadcom said it “strongly disagrees its proposed acquisition of Qualcomm raises any national security concerns.”
The Trump administration has previously said it plans to clamp down on Chinese investments in the US and will impose tariffs on certain imports to “punish” Beijing for alleged theft of US firms’ intellectual property.It’s been a turbulent few months for the buyout bid. In November last year, Broadcom put in a $103 billion offer to buy its rival, claiming the deal would position the combined company as “a global communications leader”.
Shortly after, Qualcomm issued a statement unanimously rejecting Broadcom’s “unsolicited proposal” with Paul Jacobs, executive chairman and chairman of the board of Qualcomm saying: “It is the board’s unanimous belief that Broadcom’s proposal significantly undervalues Qualcomm relative to the company’s leadership position in mobile technology and our future growth prospects.”
“No company is better positioned in mobile, IoT, automotive, edge computing and networking within the semiconductor industry. We are confident in our ability to create significant additional value for our stockholders as we continue our growth in these attractive segments and lead the transition to 5G,” added CEO Steve Mollenkopf.
In particular, the statement said that the proposal was not in the best interests of shareholders.
Then, last week Broadcom’s takeover bid was put under investigation by the Committee on Foreign Investment in the US (CFIUS), led by the US Treasury Department.
If the offer is ever accepted, it could push the new company into serious competition with the semiconductor leaders Intel and Samsung. Broadcom already provides designs for Wi-Fi and Bluetooth chips, and by bringing in Qualcomm it would be able to encompass LTE and 5G capabilities.
President Trump has issued two block notices for takeover bids in the past six months (previous president Barack Obama blocked two in two terms). Huawei said it had not been able to strike a deal to sell its new smartphone via a US carrier, widely believed to be AT&T. The US also recently blocked the sale of Moneygram to China’s Ant Financial.