In a shocking declaration today, the Trump Administration has officially blocked Singapore-based Broadcom’s proposed acquisition of rival US-based Qualcomm.The proposed deal was severely scrutinized both within and outside of the industry, and now with the White House announcement, the deal was crushed before it bloomed.
“The proposed takeover of Qualcomm by the Purchaser is prohibited, and any substantially equivalent merger, acquisition, or takeover, whether affected directly or indirectly, is also prohibited,” according to the order describing the findings of the Committee on Foreign Investment in the United States (CFIUS).”
In an order released Monday night, Trump cited “credible evidence” that the takeover “threatens to impair the national security of the United States.”
Broadcom strongly disagrees that its proposed acquisition of Qualcomm raises any national security concerns. – Broadcom
Broadcom is actually made up of two companies. Singapore-based Avago acquired the original Broadcom and took its name. They make chips used in wireless and other networks. Broadcom announced at the end of last year that it was looking forward to relocating its headquarters to the U.S.
It is unusual for the U.S. government to block as huge as this one. The purchase – which would have been the largest tech deal in history – hadn’t even been agreed to yet by the two companies. Blocking it also shows the Trump administration’s dogmatic stance on perceived threats from foreign investors and the growing technological might of China.
According to Axios, the underlying reason behind the move is because of 5G. Qualcomm is the leader in building 5G technology for U.S. telecommunications industry. The Trump Administration was concerned that Broadcom would put an end to Qualcomm’s 5G efforts, paving the way for Chinese telecommunications giant Huawei to take over as the industry leader.
By 8 p.m. Eastern Time, Qualcomm’s stock price had dropped 4.47% in after-hours trading on the White House’s statement.