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The Journal Gazette

Tuesday, March 13, 2018 1:00 am

Trump kills Qualcomm takeover try

Singapore firm made hostile bid for chip maker

Hamza Shaban | Washington Post

President Donald Trump on 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, an interagency panel led by the Treasury Department, had several more weeks to render a recommendation to the president. Trump's order cannot be appealed, 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 last week 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, a rival to Qualcomm and a major producer of mobile chips, might become much more dominant around the world.

The chips embedded in smartphones, home gadgets, and other connected devices are expected to become one of the most critical technologies in the coming years. These chipsets enable connected cars to speak to each other as well as stoplights. Almost every major business and consumer electronics manufacturer uses Qualcomm's technology as brains for their devices.

Trump's order is in line with the administration's protectionist instincts. Last week, Trump also cited national security concerns in announcing a series of tariffs on steel and aluminum imports.