Qualcomm/broadcom: blocked chip bid heralds 5G trade wars

President Trump’s decision to block a hostile takeover of the US chipmaker Qualcomm by its Singapore-based rival Broadcom on “national security” grounds has rocked the global tech industry, said Hannah Boland in The Daily Telegraph. The two companies have been wrangling for months over Broadcom’s $142bn offer – the biggest ever in the sector – but until recently the mood music from the White House sounded positive. At a glitzy photo op in November, Trump said he was “thrilled” that Broadcom’s boss, Hock Tan, had renounced Singapore’s low-tax regime to move the company’s HQ to America. Now he cites “credible evidence” that the company’s proposed tie-up with Qualcomm is a security threat.

“Broadcom’s suit for Qualcomm always faced long odds,” and was already under scrutiny by the Committee on Foreign Investment in the US (CFIUS), said Robert Cyran on Reuters Breakingviews. “But torpedoing a deal before it’s even agreed, and for vague reasons, adds to fears of protectionism.” There were worries in Washington that a takeover by Broadcom – a known cost-cutter – might slash R&D spending, and open the way for China to pull ahead in the allimportant race for 5G wireless technology: Qualcomm and China’s Huawei are the big leaders in the field. But these are surely competitive rather than security concerns.

This is at least the third high-profile deal that has fallen apart under CFIUS scrutiny during the Trump administration, said Brooke Sutherland on Bloomberg. “Jack Ma’s pledge to create one million US jobs didn’t help his Ant Financial’s attempted takeover of Moneygram International Inc.” The Broadcom block is “a warning for future dealmakers and would-be friends of Trump. He’s going to take America First to the extreme.“