US President Trump blocks Broadcom's bid for Qualcomm takeover

Inc. All rights reserved. This material may not be published broadcast rewritten or redistributed

Inc. All rights reserved. This material may not be published broadcast rewritten or redistributed

First it was the imposition steel and aluminium tariffs putting America First! The deal would also have substantial negative national security consequences for the United States, as well as it would remove a telecommunications technology supplier for federal defense agencies.

It has been seen as exploiting a loophole that risks undermining the WTO if other countries respond similarly.

President Donald Trump on Monday rejected Singapore-based Broadcom's hostile takeover of US -based Qualcomm due to national security concerns. That's probably a mergers-from-hell kind of scenario for competitors, including Samsung and Huawei, both when it comes to 5G networking technology but also other chip tech that's now in use in all sorts of smartphones and connected devices. The real reason why the government is taking all these measures against a Chinese company is a different one: Huawei's ties with the Chinese government aren't exactly clear.

The president's order is the latest sign of Trump's tough stance on foreign takeovers of USA technology, and dovetails with a broader move to contain China on trade and deal-making. At least a half-dozen technology deals have collapsed during the Trump administration in the face of concerns raised by CFIUS.

The move is highly unusual and at the same time highly demonstrative of Trump's presidency - unusual, because a United States president has previously used an executive order to block such transactions only five times in history, and demonstrative of Trump's continued push to put "America first".

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Rarer still is presidential intervention.

President Donald Trump has blocked the $117bn takeover of chip maker Qualcomm by Singapore-based Broadcom. Before waiting for an actual deal, CFIUS opened an investigation to review the risks to national security. In fact, it was more probable that Intel would target smaller acquisitions for now.

Trump's order came as Broadcom was in the midst of moving its headquarters from Singapore to the U.S. Broadcom announced the move in November after its Chief Executive Office Hock Tan met with Trump at the White House.

While Trump didn't share any of the "credible evidence" he says he saw, he gave the U.S. Attorney General full power to enforce his order and ensure Broadcom backs away.

But no matter: Broadcom's hostile takeover bid for Qualcomm threatened to disrupt an industry-wide transition to the next era of mobile computing, in which speedy 5G networking will essentially erase the access speed differences between local and remote data.

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Broadcom will not be the only party left disappointed.

Had it gone through, the acquisition would have been the largest technology deal in history, the New York Times said in a report.

The accusation that Broadcom is a front for China, meanwhile, is spurious. Now what was to have been the world's biggest tech merger has been Trumped.

Blocking a deal before it has even been agreed is pretty strident. The US government is anxious that Broadcom would slowdown Qualcomm's 5G R&D spending, a move that would solidify Huawei's lead and favor China.

Tan has already turned Avago, a small chipmaker with a market value of $3.5 billion in 2009, into a more than $100 billion company.

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And, for Silicon Valley in particular, there may now be the threat of greater sanctions from China in response.

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