President Trump may just have killed Broadcom’s bid for Qualcomm

Broadcom’s bid for Qualcomm may have just run into an insurmountable brick wall. President Trump issued a presidential order today blocking Broadcom’s proposed acquisition of the chipmaker, citing national security concerns.

In addition, the order disqualifies all 15 of Broadcom’s proposed candidates from Qualcomm’s board of directors.

Trump’s order comes after a letter from the Committee on Foreign Investment in the United States (CFIUS) expressed concerns about security. According to CFIUS, the acquisition would have led to cost cutting at the American firm and weakened its ability to compete against Chinese giants like Huawei.

As a result, China would have freer reign of the 5G wireless market, a scenario that would leave Americans more vulnerable. CFIUS considers the next-generation, high-speed 5G networks a national security interest, and said Qualcomm’s leadership in this area was too important to concede.

Broadcom is headquartered here in Singapore, but the company has since taken steps to relocate to the US to ease concerns, a process known as redomiciliation. However, the move was also part of CFIUS’ complaints, as it said that Broadcom had violated the panel’s order because it did not give it the requisite 5 business days’ notice before taking steps to relocate.

To put things simply, that may be at it for Broadcomm’s attempted takeover. If it had gone through, the US$117 billion deal would have been the largest technology takeover in history.

That said, Broadcom says it is reviewing the order and “strongly disagrees” that the acquisition poses any national security risks to the US.

Source: New York Times

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