Trump blocks Broadcom's takeover of Qualcomm

Trump blocks Broadcom's takeover of Qualcomm

Trump blocks Broadcom's takeover of Qualcomm

President Trump's decision yesterday to effectively block Broadcom's $117 billion proposed takeover of Qualcomm on national security grounds confirmed what had become increasingly apparent in recent days - that the USA authorities had taken a dim view of the deal and the prospect of a foreign company buying America's undoubted leader in wireless technology.

Donald Trump has exercised rarely-used powers to block the hostile takeover of mobile chipmaker Qualcomm by Singapore-based rival Broadcom.

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His order cited "credible evidence" that the proposed $140bn (£100bn) deal "threatens to impair the national security of the US", reports the BBC. Beyond giving you a much faster connection on your phone, 5G could serve as the communications foundation for emerging technologies like self-driving cars, streaming virtual reality experiences and advanced telemedicine options like remote surgery. "Chinese companies including Huawei have increased their engagement in 5G standardization working groups as part of their efforts to build out 5G technology". While numerous standards are in place, there are still plenty of details to be worked out.

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Huawei is also Qualcomm's main rival when it comes to developing technology for the emerging 5G standard. If Qualcomm's "technological leadership" diminishes, Mir said in his March 5 letter, Chinese tech companies stand to gain in the race to develop 5G. For instance, Qualcomm is viewed as being ahead of the curve in the development of next-generation 5G wireless technology, and the US government likely thinks that ceding control to Broadcom could allow Chinese companies such as Huawei to become leaders in this crucial space going forward.

Huawei, China's largest homegrown smartphone maker and a leader in tech innovation has been at the center of attacks by US politicians.

In addition, the order also disqualifies all 15 of Broadcom's proposed directors for Qualcomm. The agency pointed specifically to foreign investment in 5G from Chinese telecom giant Huawei as a potential threat.

That's noteworthy because Broadcom has consistently worked to remain ahead of the game in its pursuit of Qualcomm by, for example, raising its bid for Qualcomm and then also speeding up the relocation of its headquarters. Intel, which sells chips for laptops and desktops, missed the boat on smartphone chips. In an infographic that it recently filed with the SEC, Broadcom even highlighted Qualcomm's growing ties to the world's most populous country declaring that it is "time to set the record straight about Qualcomm's business relationships in China".

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