Trump’s rejection of Qualcomm takeover sends investors a clear signal
WITH his swift rejection of Broadcom’s hostile takeover of Qualcomm, President Donald Trump sent a clear signal to overseas investors: any deal that could give China an edge in critical technology will be swatted down in the name of national security.
Although Broadcom is based in Singapore, China loomed large over the US government’s fears about a foreign takeover of chip maker Qualcomm.
That’s because Qualcomm is locked in a head-to-head race with China’s Huawei Technologies over which company will dominate the development of next-generation wireless technology.
“This decision hangs a huge ‘not-for-sale’ sign on just about every American semiconductor firm,” said Scott Kennedy, who studies China’s economic policy at the Center for Strategic & International Studies in Washington. “A Chinese entity doesn’t need to be anywhere near a transaction now in semiconductors for the deal to be nixed.”
The president’s order on Monday blocking Broadcom’s $117 billion (R1.38 trillion) bid for Qualcomm is the latest sign of Trump’s tough stance on foreign takeovers of US technology and is part of a broader move to contain China on trade.
The Trump administration is considering clamping down on Chinese investments in the US and imposing tariffs on a broad range of its imports to punish Beijing for its alleged theft of intellectual property.
Only five takeovers of American firms have been blocked by US presidents on national security grounds since 1990. Of those, Barack Obama blocked two deals during his two terms. Trump has blocked two in six months.
“There is credible evidence that leads me to believe that Broadcom,” by acquiring Qualcomm, “might take action that threatens to impair the national security of the US,” Trump said in the order released on Monday evening in Washington.
Shares in Qualcomm fell 4.83 percent at 9.20am in Frankfurt.
Broadcom said ment it was reviewing the order and that it “strongly disagrees that its proposed acquisition of Qualcomm raises any national security concerns.”
Qualcomm didn’t respond to requests for comment.
Trump isn’t the only hurdle to getting deals done.
Lawmakers in Washington are moving forward with legislation that would expand the universe of overseas investments that require national security approval. – Bloomberg