Trump blocks Broadcom's takeover of Qualcomm

US President Donald Trump has issued an executive order blocking Singapore-based chipmaker Broadcom's attempted hostile takeover of US-based rival Qualcomm.

The presidential order, issued on Monday, cited credible evidence that the US$117 billion ($148.5 billion) proposed acquisition represents a threat to national security.

The order prohibits any proposed takeover of Qualcomm by Broadcom or merger between the companies, and disqualifies all proposed Broadcom nominees to the Qualcomm board.

The decision will be a relief to Qualcomm, which has repeatedly recommended shareholders reject Broadcom takeover offers on the grounds that they undervalue the company.

While the order does not go into details regarding the Trump administration's reasoning for the intervention, it is believed that Broadcom's status as a non-American incorporated company is the sticking point.

The Committee on Foreign Investment in the United States has advised the administration that US technical competitiveness in the mobile equipment sector is at risk from China.

The committee stated that reducing Qualcomm's long-term technological competitiveness would leave an opening for China to expand its influence in 5G standards setting processes, which would as a consequence significantly impact US national security.

While Broadcom was originally founded in the US, the company was acquired by Avago Technologies for US$37 billion in 2015. Avago was itself spun out of HP, and has established its corporate HQ in Singapore for tax purposes.

Broadcom had expressed an intention of moving back to the US by May, but even this undertaking was not enough to prevent the issue of the order.

Image courtesy whitehouse.gov

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