Broadcom has been trying to buy Qualcomm for months, and while Qualcomm’s board has been cool to the proposals so far, Qualcomm has suggested that it might be willing to sell for the right price… assuming the deal wouldn’t run afoul of government regulators.

Now it looks like we won’t even get to that last part. Donald Trump issued a presidential order today blocking the deal, claiming that allowing Singapore-based Broadcom to take over San Diego-based Qualcomm could “impair the national security of the United States.”

No wonder Broadcom put out a statement earlier today claiming that it was planning to move its headquarters to the United States by April 3rd… it just appears that the move might have been too little, too late as far some were concerned.

According to the executive order, the decision to block the deal follows a recommendation by the US Committee on Foreign Investment, which had been reviewing the proposed takeover.

The language of the order is pretty strong, stating that “the proposed takeover of Qualcomm by the Purchaser is prohibited, and any substantially equivalent merger, acquisition, or takeover, whether effected directly or indirectly, is also prohibited.”

In other words, it doesn’t look like this is going to happen anytime soon… which probably comes as a relief to rival chip maker Intel, which had allegedly been considering spending an awful lot of money to buy Broadcom so that it wouldn’t have to compete with a combined Broadcom/Qualcomm.

via Reuters, NY Times, and Engadget

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12 replies on “Trump blocks Broadcom’s effort to takeover Qualcomm for national security concerns”

  1. I guess it’s time to sell QCOM stock. I bought a bunch right before the whole Broadcom takeover rumors started. Despite being a major player in ARM processors and wireless, they weren’t doing so well before this whole Broadcom thing. I wonder how low it’ll go.

  2. Well the Intel shareholders are happy. Intel stock just hit a 17 year high in after hours trading. (Not that I’m complaining, since I own some 🙂

    1. Broadcom is still not a US company, though. They may have US headquarters now here out of financial reasons, but they are still very much Singapore based.

  3. On one hand, that’s a bit of a relief, the more players the market has the better, we don’t want something like the Intel hegemony in x86 CPUs or Samsung’s in NAND to repeat (we got our hands full with those for the moment).
    On the other hand: can the president tell you what to do with your company? Like, if I run a lemonade stand and want to buy out the other guy’s lemonade stand across the street can he just tell me I can’t do that? When did the government gain veto-power on my business?

    1. The government blocking mergers is nothing new, although it hasn’t been happening that much or enough lately. Usually it’s based on anti-competitiveness concerns, not national security, and not the President acting.

      And sometimes the government will break up companies. Standard Oil and AT&T are the prime examples of that, but those were probably in the 1920s and 1970s (without looking).

    2. In certain circumstances, yes, the executive has the power either through anti-trust lawsuits or national security concerns. The company in question can seek relief from such actions through the court system. Anti-trust powers were created over 100 years ago, and the national security powers related to company buyouts almost 70 years ago. These are nothing new.

      Of course, this type of deal, where a foreign company is taking over an American one plays directly into Trump’s protectionist instincts, so it should come as no surprise that he issued the order.

      I’m assuming you already knew we don’t live in a libertarian paradise, so why play dumb? Either way, we’re not talking lemonade stands, here.

    3. I guess the president can if it’s for national security reasons. Trump also blocked the purchase of Lattice Semiconductor (FPGA company) to a Chinese backed firm last year due to national security reasons.

      From my understanding, both this and with Lattice, they were recommendations to Trump from security/defense agencies/orgs.

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