Trump blocks Broadcom takeover of Qualcomm citing national security risk

Posted:
in General Discussion edited March 12
President Donald Trump has quashed Singapore-based Broadcom's hostile pursuit of U.S. chipmaker Qualcomm citing national security concerns, the White House said in a statement on Monday.




The directive restricts Broadcom from acquiring, taking over or merging with Qualcomm, according to a statement obtained by Axios. A separate report from CNBC highlights the reasoning behind Trump's decision.

"There is credible evidence that leads me to believe that Broadcom Limited, a limited company organized under the laws of Singapore (Broadcom)...through exercising control of Qualcomm Incorporated (Qualcomm), a Delaware corporation, might take action that threatens to impair the national security of the United States," the White House said.

Under the order, both companies must cease all efforts toward an acquisition.

The news comes just hours after Broadcom made public plans to redomicile to the U.S., a move designed in part to sidestep a Committee on Foreign Investment in the United States (CFIUS) investigation into its proposed Qualcomm takeover. The panel was concerned that Broadcom's purchase of Qualcomm would weaken the chipmaker's standing in the semiconductor industry. Broadcom's ties with foreign entities were also of concern.

"Given well-known U.S. national security concerns about Huawei and other Chinese telecommunications companies, a shift to Chinese dominance in 5G would have substantial negative national security consequences for the United States," CFIUS said in a letter dated March 5.

A previous CFIUS letter dated March 4 instructed the company to provide five business days' notice before taking action to redomicile.

Following word of the CFIUS investigation, Broadcom on March 6 requested a hearing with the Singapore Court. The court "directed" Broadcom to hold a shareholder meeting on March 23 to decide its proposed redomiciliation, the company said in a Securities and Exchange Commission filing.

Broadcom's first overture for Qualcomm's business came as a $130 billion bid in November. That attempt was declined, as were subsequent offers of $121 billion and $117 billion.

Both Broadcom and Qualcomm are Apple suppliers, though it was Apple's legal battle with Qualcomm that in part spurred Broadcom's now blocked acquisition attempt.

Qualcomm saw profits plummet over the past months due to an ever-growing legal battle with Apple, as well as related government investigations into the chipmaker's business practices. Apple was first to file last year when it leveled a $1 billion suit claiming Qualcomm withheld royalty payments in retaliation for Apple's cooperation in a South Korean antitrust investigation. Further, the tech giant asserts Qualcomm flouts FRAND (fair, reasonable and nondiscriminatory) patent commitments to charge customers exorbitant royalty rates on standard-essential patents and participates in monopolistic practices, price gouging, extortion and other nefarious acts.

Qualcomm launched its own legal salvo in retaliation, filing a series of countersuits asserting Apple breached contractural agreements. The chipmaker contends Apple's legal maneuvering is merely a ploy to garner favorable licensing fees.
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Comments

  • Reply 1 of 38
    tallest skiltallest skil Posts: 43,143member
    Sounds about right. I’m not much a fan of mandated backdoors being built into software/hardware for other countries’ governments, either. 
    SpamSandwichjbdragoncornchipmagman1979bshankrepressthiswatto_cobrajony0pscooter63
  • Reply 2 of 38
    SpamSandwichSpamSandwich Posts: 29,266member
    Time to make an offer, Intel. ;)
    longpathanton zuykovrepressthis
  • Reply 3 of 38
    Competitions....anyone?

  • Reply 4 of 38
    Sounds about right. I’m not much a fan of mandated backdoors being built into software/hardware for other countries’ governments, either. 
    But not so long ago, it was an American company. And Singapore is an US alliance.
    lolliveradm1redgeminipafastasleep
  • Reply 5 of 38
    jbdragonjbdragon Posts: 1,721member
    Sounds about right. I’m not much a fan of mandated backdoors being built into software/hardware for other countries’ governments, either. 
    That includes the U.S.
    tallest skilbaconstanglolliveradm1sandorwatto_cobrajony0
  • Reply 6 of 38
    jbdragonjbdragon Posts: 1,721member
    viclauyyc said:
    Sounds about right. I’m not much a fan of mandated backdoors being built into software/hardware for other countries’ governments, either. 
    But not so long ago, it was an American company. And Singapore is an US alliance.
    Merging the 2 basically gives them a Monopoly in this area. Doesn't seem like a very good idea.
    baconstang
  • Reply 7 of 38
    tallest skiltallest skil Posts: 43,143member
    viclauyyc said:
    Singapore is an US alliance.
    Because “allies” don’t spy on each other, right? I reject, unconditionally, the idea of having an alliance with another nation that has no date of expiration. I would even state a specific maximum amount of time for said alliance. I would even reject the concept of “alliances” in the first place. George Washington had it right, and every problem of the last century came from not following his advice. But that’s another story and not directly related to the thread.
    edited March 12 cornchipbshankrepressthis
  • Reply 8 of 38
    wood1208wood1208 Posts: 1,405member
    Apple wants Broadcomm to buy Qualcomm. Intel wants to buy Broadcomm. Due to national security reason, Trumps blocked allowing Broadcomm to buy Qualcomm than how Intel can buy Broadcomm unless Broadcomm re-domicile in USA.
    edited March 12 bshank
  • Reply 9 of 38
    viclauyyc said:
    Singapore is an US alliance.
    Because “allies” don’t spy on each other, right? I reject, unconditionally, the idea of having an alliance with another nation that has no date of expiration. I would even state a specific maximum amount of time for said alliance. I would even reject the concept of “alliances” in the first place. George Washington had it right, and every problem of the last century came from not following his advice. But that’s another story and not directly related to the thread.
    Are you saying our alliances with dictatorships haven’t worked out?  What about mass murderers? When the goal all along was profit, and not promoting American Ideals... I’d say things worked out pretty well.

    ....
    I think we can make a blanket statement: Any merger or acquisition over 100 Billion isn’t in the public’s best interest;  100% of the time it will create a monopoly and stifle innovation.
    DAalsethbaconstangtallest skilrepressthisadm1jony0
  • Reply 10 of 38
    georgie01georgie01 Posts: 144member
    It seems to me that Broadcom was trying to play a game and I suspect the US government has genuine founded concerns about it if President Trump would almost immediately step in when Broadcom announced plans to redomicile. Whether or not anything is true is another story, but I suspect the decision is not without merit.
  • Reply 11 of 38
    sflocalsflocal Posts: 4,097member
    As much as I can't stand the monkeys running Qualcomm, I'm not a fan of selling out to overseas firms that have a higher likelihood of being in the cahoots with countries like China.  I hope Intel buys QC, fires all of management, and makes some great chips.
    magman1979pscooter63
  • Reply 12 of 38
    FolioFolio Posts: 263member

    Though I know nothing more than in media reports, as a backer of Western style democracy I’m relieved too. You want to err on the side of caution in such a case. Pentagon sponsored seminal work of Irwin Jacobs and Andrew Viterbi at Linkabit (a predecessor to Qualcomm) around time of Arpanet research (the pre-commercial Internet). Leading communications vital to military prowess, now more than ever with coordinated fleets of drones, smarter munitions, etc. 

  • Reply 13 of 38
    chasmchasm Posts: 585member
    I wonder what will happen should Qualcomm fail due to the litigation against its criminal business model ...

    But even ignoring the court cases, Qualcomm is falling behind its competitors in quality and innovation, making its future look, at best, cloudy. The US needs to think about what would happen if Qualcomm shoots itself in the head, business-wise.
  • Reply 14 of 38
    tshapitshapi Posts: 277member
    georgie01 said:
    It seems to me that Broadcom was trying to play a game and I suspect the US government has genuine founded concerns about it if President Trump would almost immediately step in when Broadcom announced plans to redomicile. Whether or not anything is true is another story, but I suspect the decision is not without merit.
    I suspect someone from intel or Qualcomm made a phon call... And here we are.  Some vey powerful people are against this merger and I suspect are leaning on national security as a reason. 
    sandor
  • Reply 15 of 38
    I stand with the Trump Administration.
  • Reply 16 of 38
    avon b7avon b7 Posts: 2,210member
    This is simply more protectionism. If they are worried about the Chinese 'influence' in 5G, all I can say is they dropped the ball in a big way.

    Do they plan to create a techno bubble to live in?

    I suppose it won't be long before some affected countries bite back.


    redgeminipa
  • Reply 17 of 38
    xbitxbit Posts: 200member
    America shouldn’t stand in the way of the free market. Government’s role shouldn’t be to stop failing companies from takeover.
  • Reply 18 of 38
    adm1adm1 Posts: 808member
    How will the US government stop Qualcomm being broken up and sold off to the highest bidder when they eventually file for bankruptcy? I think a takeover by a former US company (one that was willing to redomicile at that) was the much preferred option for "national security" since that was the argument all along.
    redgeminipa
  • Reply 19 of 38
    adm1 said:
    How will the US government stop Qualcomm being broken up and sold off to the highest bidder when they eventually file for bankruptcy? I think a takeover by a former US company (one that was willing to redomicile at that) was the much preferred option for "national security" since that was the argument all along.
    Here's one way:

    The Feds kept Lockheed Aircraft in business for years because of their talent and tech.  At one time Lockheed had more satellites in the sky than everyone else combined;  the aerospace, shipbuilding, Skunkworks, missiles, aircraft the the U2, Subchasers, etc.

    The easiest way is for the Feds to keep issuing cost plus contracts to keep the company going.

    Lockheed was merged with Martin another US company

    https://en.wikipedia.org/wiki/Lockheed_Corporation
    edited March 13
  • Reply 20 of 38
    blastdoorblastdoor Posts: 1,816member
    I stand with the Trump Administration.
    I think maybe in this case, I do too. Broken clocks are right twice a day, I guess. 
    redgeminipaDAalseth
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