News / Economy

Trump blocks $117bn takeover of Qualcomm over security risks

Tuesday, 13 March 2018 9:59 AM [ Last Update: Tuesday, 13 March 2018 10:05 AM ]

Qualcomm headquarters in San Diego, California (file photo)

US President Donald Trump blocked an unsolicited bid by Singapore-based Broadcom to take over smartphone chipmaker Qualcomm, citing national security concerns.

Trump issued an order barring the proposed mega-acquisition on Monday, saying there is credible evidence such a deal "threatens to impair the national security of the United States," according to a White House statement.

The order came despite Broadcom's assurances that it would complete its move to the United States by early April, ahead of a previously-planned Qualcomm shareholder vote on the $117 billion deal -- meaning any national security concerns were moot.

"Broadcom strongly disagrees that its proposed acquisition of Qualcomm raises any national security concerns," the company said, adding that it was reviewing the order.

The Treasury Department said in a letter over the weekend that Broadcom had violated a Committee on Foreign Investment in the United States (CFIUS) order on three separate occasions by failing to give advance notice before taking actions such as lodging takeover-related securities filings in the United States.

CFIUS likely had China concerns, possible Broadcom's relationship with entities there or the fact that the only company other than Qualcomm investing heavily in long-term mobile chip research is Huawei, the analyst speculated.

Along with self-driving cars, drones and robots depending on super-fast wireless data connections, such networks will also be relied on by the military.

Trump ordered Broadcom and Qualcomm to "immediately and permanently abandon the proposed takeover."

The rival chip giants were told to notify CFIUS in writing that all aspects of the order had been followed.

"This deal was a bad idea from the start," said analyst Patrick Moorhead of Moor Insights and Strategy.

Broadcom shares closed the trading day up 3.5 percent to $262.84 and gained slightly more in after-market trades. Qualcomm shares sank 4.4 percent to $60.04 in the after-market.

(Source: AFP)

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