Trump scuttling Qualcomm deal could mean more foreign scrutiny
NEW YORK (AP) — The decision by President Donald Trump to scuttle a hostile takeover by Singapore's Broadcom of the U.S. chipmaker Qualcomm could signal a shift toward stronger sector oversight.
The deal raised red flags for government officials worried about ceding control of telecom or wireless infrastructure to foreign entities in the long run.
“These transitions come along almost every decade or so, moving to a new iteration of technology,” said Jon Erensen, research director for semiconductors at research firm Gartner. “The government is being very careful to ensure the U.S. keeps its leadership role developing these standards.”
Shares of Qualcomm slid more than 4 percent Tuesday.
Trump said Monday that a takeover of Qualcomm would imperil national security, ending Broadcom's $117 billion buyout bid.
Although its name isn't widely known outside the technology industry, San Diego-based Qualcomm is one of the world's leading makers of the processors that power many smartphones and other mobile devices. Qualcomm also owns patents on key pieces of technology.
Qualcomm has long been a leader in previous iterations of broadband cellular network technologies like 3G and 4G and poured research and development money into developing 5G technology and related standards and practices.
“We're seeing China emerge and start to play a bigger role in the standards developing process,” Erensen said. At the same time, there has been a wave of consolidation in the industry, so “the direction for the technology and standards has been fewer hands at this point and the stakes are bigger.”
The Committee on Foreign Investment in the United States, which reviews the national security implications of foreign investments, had cited concern that Broadcom has a penchant for cutting costs, which might lead to Qualcomm being less of an industry leader.