President Trump nixes Broadcom-Qualcomm deal

Broadcom's attempt to take control of rival chipmaker Qualcomm appears to have hit a tough barrier, as US President Donald Trump has weighed in with a presidential order forbidding any merger between the two companies. Furthermore, Trump disqualified all 15 of Broadcom's candidates for Qualcomm's board of directors. The order cites national security concerns as the primary reason for blocking the acquisition of San Diego-based Qualcomm by Broadcom, an organization with elements in the US, Singapore, and the Cayman Islands.

Trump cites subsection 721f of the Defense Production Act of 1950 in the order, but does not specifically refer to how a merger between the two silicon design firms would "impair the national security of the United States." The New York Times' Cecilia Kang posits that Trump blocked the merger as part of the administration's campaign to level the playing field between the US and economic rival China.

The executive order also includes instructions for Qualcomm to accelerate its elections for its board of directors. The company is now moving forward toward a March 23 date for electing its board.

Broadcom issued an exceptionally-brief press release denying the suggestion that its acquisition of Qualcomm would pose any threat to US national security, stating simply that "[it's] reviewing the Order", and that "[the company] strongly disagrees that its proposed acquisition of Qualcomm raises any national security concerns."

Aimen Mir, a member of the Committee on Foreign Investment in the United States (CFIUS), says the committee concluded that the deal would weaken Qualcomm's leadership position in the field of next-generation 5G mobile networks and leave an opening for Chinese manufacturer Huawei. Broadcom already initiated plans to move its headquarters to the US and reportedly wrote to lawmakers promising not to slow R&D efforts in 5G mobile networks even if it was allowed to acquire Qualcomm.

Comments closed
    • maxxcool
    • 1 year ago

    Anyone else read in their head “President Trump Nixons Broadcom-Qualcomm deal”

    • Aquilino
    • 1 year ago

    <Dunkey voice>And this is how you do a trade war!</Dunkey voice>

    • davidbowser
    • 1 year ago

    This shouldn’t surprise anyone who follows US politics and how it overlaps with business. Current controlling political party stance is to block/slow any non-US companies control and to incentivize or threaten any global US companies into focusing on US business. It has happened before and it will happen again.

    The challenge is when the US companies or non-US with direct influence on US government officials push for THEIR exceptions to the rules. 30-40 years ago, US car companies were pushing for rules/tariffs against the Japanese car companies while simultaneously starting to invest in outsourcing labor to other countries. Our president’s companies have been and continue to be investing HEAVILY in non-US business, so I don’t think this administration is materially any different than previous “America first” administrations.

    • highlandr
    • 1 year ago

    That is the shortest press release I’ve ever seen!

    • barich
    • 1 year ago

    This might be the first thing he’s done that I actually approve of.

      • shank15217
      • 1 year ago

      Right, let’s strong hand everything without due process

    • Anonymous Coward
    • 1 year ago

    I approve of blocking mega-mergers. Companies need to compete with each other, not collaborate and collect what amounts to taxes on innovative parts of the economy (looking at you, DRAM makers).

      • shank15217
      • 1 year ago

      There is an existing process for that through courts, this was idiotic and short sighted

        • Anonymous Coward
        • 1 year ago

        I’m not into the legal details, but as long as two objectives: (1) stop formation of monster tech company, and (2) maintain position of US in tech, are achieved, then I’m happy.

    • shank15217
    • 1 year ago

    Using the Defense Production Act of 1950 will make sure that Broadcomm with sue the US government and if they win, it would weaken the law for a possibly bad merger in the future. Trump is the biggest idiot this century and we’re not even a 5th through.

      • ludi
      • 1 year ago

      And if they do and lose, it will make the precedent stronger. That’s Law 101.

      Do you think that Broadcom is [i<]likely[/i<] to both sue and win, and if so, what is the likely legal basis?

        • shank15217
        • 1 year ago

        A multiple billion dollar deal suddenly cut off due to a security clause, yea expect a fight in court. Our clown of a president makes us weaker every day.

          • ludi
          • 1 year ago

          So you are dropping your claim about the Defense of Production Act? Just a routine lawsuit because that’s what companies do when their ambitions are blocked by government?

            • shank15217
            • 1 year ago

            I’m not, and this is not routine, it’s a brash off the cuff response from White House.

    • Waco
    • 1 year ago

    Sigh. Trump needs to stop screwing with things he clearly doesn’t understand.

      • Neutronbeam
      • 1 year ago

      Which pretty much includes life, the universe and everything.

        • euricog
        • 1 year ago

        He does understand stupidity. In fact, he seems to master it!

          • tipoo
          • 1 year ago

          A strange skill, the only way to master it is to not understand it at all!

        • Grigory
        • 1 year ago

        As a self-made billionaire he must know something. He is a lot smarter than us put together, that’s for sure.

          • Waco
          • 1 year ago

          Funny. I thought he started with a lot of money that, wisely invested, would handily exceed his business gains.

          • shank15217
          • 1 year ago

          He’s not a self made anything you’ve been duped

      • adisor19
      • 1 year ago

      In this case it’s not him but rather this close acolytes and at least they seem to have some understanding as IMO, this is a good decision.

      Adi

        • Waco
        • 1 year ago

        I have mixed feelings on it.

          • NovusBogus
          • 1 year ago

          At least someone is trying to do something about corporate America’s tendency to piss away the country’s strategic assets in service to the “six month ROI or else” suicide cult. I’m too young to have ever known a time where regulatory instruments like CFIUS were anything more than a rubber stamp so I find it all rather refreshing.

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