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Trump blocks Broadcom’s $117 billion bid for Qualcomm out of national security concerns, a highly unusual move

  • by FMR
  • 10 Days ago
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Cristiano Amon, president of Qualcomm, makes a presentation during the Mobile World Congress in Barcelona, Spain, last month. Photographer: Angel Garcia/Bloomberg

President Trump Monday ordered Singapore-based Broadcom to abandon its $117 billion hostile bid for Qualcomm, blocking what would have been one of the biggest technology deals in history.

In his presidential order, Trump cited “credible evidence” that the takeover “threatens to impair the national security of the United States.” The merger would have put one of America’s largest mobile chipmakers in the hands of a company based in Asia, a region that has been racing against American companies to develop the next generation of mobile technology.

The administration moved with unusual speed in the matter that caught many involved in the negotiations off guard. The Committee on Foreign Investment in the United States, or CFIUS, had several more weeks to render a recommendation to the president. Trump’s order cannot be appealed, legal experts said.

The move demonstrates the high value that the administration places on maintaining the U.S. edge in developing micro technologies.

The administration did not detail its national security concerns, but CFIUS over the weekend sent a letter to the attorneys of the two companies saying it was concerned research and development at Qualcomm might atrophy under Broadcom’s direction, according to a copy that was reviewed by The Washington Post. If that happened, China’s Huawei Technologies would become a much more dominant maker of mobile chips.

The tiny computer chips embedded in smartphones, smart home gadgets, and a wide range of other devices are expected to become one of the most critical technologies in the coming years. Almost every major business and consumer electronics manufacturer uses Qualcomm’s technology as brains for their devices.

Trump’s order also is in line with the administration’s protectionist instincts. Last week, Trump also cited national security in announcing a series of harsh tariffs on steel and aluminum imports, a move that hit rivals such as China as well as allies such as Germany and South Korea.

This story is developing.

Source:: http://www.washingtonpost.com/blogs/the-switch/wp/2018/03/12/trump-blocks-broadcoms-117-billion-bid-for-qualcomm-out-of-national-security-concerns-a-highly-unusual-move/

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