Trump kills US$117 billion takeover of Qualcomm by Singapore’s Broadcom, citing national security threat
Trump had hailed chipmaker Broadcom’s recent decision to relocate to the US, but its bid for 5G wireless tech firm had also stoked China fears
President Donald Trump issued an executive order on Monday blocking Singapore’s Broadcom Ltd from acquiring Qualcomm Inc, scuttling a US$117 billion deal that had been subject to US government scrutiny on national security grounds.
The president acted on a recommendation by the Committee on Foreign Investment in the US, which reviews acquisitions of American firms by foreign investors. The decision to block the deal was unveiled just hours after Broadcom Chief Executive Officer Hock Tan met with security officials at the Pentagon in a last-ditch effort to salvage the transaction.
“There is credible evidence that leads me to believe that Broadcom Ltd” by acquiring Qualcomm “might take action that threatens to impair the national security of the United States,” Trump said in the order released Monday evening in Washington.
Trump’s order came after an investigation by CFIUS, which had said that Broadcom’s acquisition would undermine Qualcomm’s leadership in 5G wireless technology, opening the door for China’s Huawei Technologies Co to become dominant.
In November, Trump announced and applauded Broadcom’s decision to move its headquarters to the United States, calling the company “one of the really great, great companies.” He has not spoken about the matter recently.
But in a Treasury Department letter to Broadcom outlining security concerns, top CFIUS official Aimen Mir said Broadcom “took a series of actions in violation” of a March 4 order from the Treasury Department which required CFIUS to be notified five business days before taking any action toward moving back to the United States, where Broadcom was founded.
Broadcom, incorporated in Singapore and co-headquartered there and in San Jose, California, denied this.
“Given Broadcom’s public disclosures about the redomiciliation process since last November, as well as its direct communications to CFIUS, Broadcom has been fully transparent with CFIUS about the redomiciliation process, and believes it is in full compliance with the March 4 interim order,” the company said in a statement.
The Treasury Department letter was “obviously a poison pill,” said Jim Lewis, a CFIUS expert at the Centre for Strategic and International Studies, who described the communication to Broadcom as “unprecedented.”
Broadcom said on Monday it intended to complete the process of becoming a US corporation by April 3, before any deal with Qualcomm would be agreed.
Additional reporting by Reuters