Citing national security concerns, U.S. President Donald Trump stepped into the middle of a contentious hostile takeover attempt by Broadcom of chipmaker Qualcomm March 12 and blocked it. It was the latest demonstration of his administration’s increasingly protectionist business stance.
In his presidential order, Trump said “there is credible evidence” that led him to believe the $117 billion acquisition of San Diego, Calif.-based Qualcomm by Broadcom “might take action that threatens to impair the national security of the United States.”
Even though Broadcom is a Singapore-based company, any kind of connection with U.S. information technology information seeping into China was the main concern impacting the president’s action. According to The New York Times, The administration’s dissatisfaction originates from the viewpoint that allowing a United States-based technology company to be acquired would cede its primacy in the semiconductor industry and allow China to gain a competitive advantage.
In recent weeks, 5G networking—which Qualcomm has made a central focus of its business–has emerged to draw the attention of regulators and lawmakers, overtaking other issues such as the billions that Broadcom is willing to spend on the deal and oversized influence the combined companies would have in the global technology industry.
Only a few days ago, Broadcom’s buyout bid was of such high concern to lawmakers that they asked federal regulators to review the proposed $117 billion deal—and unusual move considering the two companies haven’t come to terms on a buyout deal. Trump’s declaration on March 12 is a likely result of that review.
The lack of an agreement was also an issue raised by the U.S. Treasury Department in a letter to both companies outlining the reasons why the Committee on Foreign Investment in the United States (CFIUS) decided to take up such a review and ordered Qualcomm to delay its scheduled March 6 shareholder meeting for at least 30 days. The meeting is set for April 5.
Trump’s action March 12 followed an intervention this month by the Committee on Foreign Investment in the United States, which typically works behind closed doors and reviews deals only after they are announced, to stall the deal because of national security concerns.
The March 12 order was only the latest by Trump, who campaigned in 2016 on bringing business back to the United States. Last week, Trump also approved stiff and sweeping tariffs in the name of national security, saying that steel and aluminum imports were a threat to American manufacturing.