U.S. blocks Broadcom-Qualcomm deal on national security grounds
Published 12:00 am Tuesday, March 13, 2018
WASHINGTON — President Donald Trump blocked Broadcom’s $117 billion bid for the chipmaker Qualcomm on Monday, citing national security concerns and sending a clear signal that he was willing to take extraordinary measures to promote his administration’s increasingly protectionist stance.
In a presidential order, Trump said “credible evidence” had led him to believe that if Singapore-based Broadcom were to acquire control of Qualcomm, it “might take action that threatens to impair the national security of the United States.” The acquisition, if it had gone through, would have been the largest technology deal in history.
Trump’s decision to prohibit the deal underscored the lengths he is willing to go to shelter U.S. companies from foreign competition. In recent weeks, the president has turned to an arsenal of tools — including tariffs and an obscure government review panel — to ward off foreign control in U.S. industries and, in particular, thwart the rise of China.
The president has focused many of these actions on the technology industry. While the U.S. has long claimed an advantage in tech, it is now facing emboldened rivals in China, where the government has heavily invested in everything from semiconductors to wireless networks and artificial intelligence. Through its recent actions, the White House has revealed its view that the country’s national security is tied to its advancement of those technologies.
National security was also cited by Trump last week when he approved stiff and sweeping tariffs on imported steel and aluminum, saying those imports were a threat to U.S. manufacturing. Trump singled out Chinese steel as a key factor in his decision; he has said that China has routed steel through other countries and flooded the United States with cheap metal.
Trump was given an opening to block Broadcom’s bid for San Diego-based Qualcomm earlier this month. That was when the Committee on Foreign Investment in the United States, a government panel that typically works behind closed doors and reviews deals after they are announced, said it would stall Broadcom’s bid because of national security concerns while it examined the deal.
Broadcom said it was reviewing Trump’s order, and disputed the notion that the bid posed a security threat.
While Broadcom is based in Singapore, China was the main concern that drove Trump’s decision over the Qualcomm deal, because allowing a U.S. tech company to be acquired would cede its primacy in the semiconductor and wireless industry.