Trump’s re­jec­tion of Qual­comm takeover sends in­vestors a clear sig­nal

The Star Late Edition - - BUSINESS REPORT | INTERNATONAL - David McLaugh­lin and Saleha Mohsin in a state-

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

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