Broadcom-Qualcomm Takeover Blocked By White House on National Security Grounds
by Ryan Smith on March 12, 2018 8:40 PM EST- Posted in
- Legal
- Qualcomm
- Broadcom
- Semiconductors
- Acquisition
Stepping into the increasingly wild saga that has been Broadcom’s efforts to purchase Qualcomm, the US government is now weighing in by issuing a new order to block the merger of the two companies. Citing national security concerns with the Singapore-based Broadcom acquiring the US-based Qualcomm, President Trump issued an order under the Defense Production Act of 1950 to prohibit the proposed acquisition or any similar transaction, effectively ending Broadcom’s acquisition efforts.
Given what would have potentially been the largest acquisition to date in the technology industry, Broadcom’s acquisition efforts had already attracted the attention of Committee on Foreign Investment in the United States (CFIUS), who was investigating the buyout. However in exercising his own authority based on the CFIUS’s recommendations, the President has blocked the merger on national security grounds, citing that through their ownership of Qualcomm, Broadcom “might take action that threatens to impair the national security of the United States.”
As a result of the presidential order, Broadcom’s purchase efforts are on hold for the time being, if not forever. The order requires the two companies to immediately stop any and all merger activity, and to unwind any efforts they’ve taken thus far, reporting to the CFIUS on their progress. Furthermore the candidates that Broadcom was running for Qualcomm’s board of directors are barred from participating in that election, and Qualcomm cannot accept their nominations.
The President's order does not go into detail about the national security concerns he and the CFIUS have with the potential deal. But the Washington Post, citing a letter from the CFIUS sent to the companies’ attorneys sent over the weekend, notes that “it was concerned research and development at Qualcomm might atrophy under Broadcom's direction” and that Qualcomm rivals such as Huawei “might become much more dominant around the world” as a result.
As the framework blocking the acquisition is a presidential order, it cannot be appealed and this block is seemingly permanent. However as Broadcom has already been going through great lengths to acquire the company, including planning to redomicile to the US so that the acquisition was no longer a foreign deal, it might yet prove too early to rule them out entirely.
Update 3/14: Broadcom has formally ended its efforts to acquire Qualcomm, noting that the offer has been "withdrawn and terminated." Interestingly however, the company still intends to go ahead with their redomiciliation plans, which were originally only undertaken in order to improve the chances of the buyout being approved.
Source: The White House
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HStewart - Tuesday, March 13, 2018 - link
Oops typo "Intel does have any ARM" should be "Intel does NOT have any ARM"It is really frustrating that messages can not be edited especially with stupid typos
darkich - Tuesday, March 13, 2018 - link
Yeah, that's exactly what the world needs..Intel spreading it's criminal monopolism over to the most critical area of semiconductor technology(ULP chips)halcyon - Tuesday, March 13, 2018 - link
I think you forget, that 4% of the world's population do NOT the whole Anandtech readership make. The rest of us, you know 96% of us, would just like to trade freely.Mr Perfect - Tuesday, March 13, 2018 - link
I'd be fine with Intel buying Qualcomm. Mainly because Qualcomm provides horrible support for their SoCs. Qualcomm provides two years of driver updates for a SoC after it's release, meaning that getting an OS update for your phone is a nightmare. Intel, on the other hand, supports a chip for four or five years. Maybe even longer, Intel just release microcode updates for 2011's Sandybridge parts. Speaking purely as a consumer, I'd rather buy from Intel then Qualcomm.quadrivial - Tuesday, March 13, 2018 - link
If the president blocks the purchase by a company in Singapore, why wouldn't he do the same for a company from China or some other country?lilmoe - Tuesday, March 13, 2018 - link
How do you tackle a monopoly? Why with a BIGGER monopoly!! Duhh!tuxRoller - Wednesday, March 14, 2018 - link
Falkor competes well even with int heavy benchmarks. Let's not eliminate the one arm hope for enterprise:)Kevin G - Tuesday, March 13, 2018 - link
Amusingly over the weekend there was a rumor that Intel was considering buying Broadcom as a strategy to prevent the Broadcom-Qualcomm merger. It would have kept Qualcomm independent and thus something Intel could have defeated in the open market. Only reason Intel was looking at Broadcom to purchase was that Intel would have had a better chance of this passing through regulators even though buying Broadcom would have been a $110+ billion dollar deal.HStewart - Tuesday, March 13, 2018 - link
NO... NO... Broadcom purchasing Qualcomm would be serious BAD for Intel. This basically means that Broadcom/Qualcomm would basically have a monopoly in telecommunications market and also more importantly that it would be foreign own - which is primary reason the government step in.CheapSushi - Tuesday, March 13, 2018 - link
GOODI hope an Intel buy gets blocked too, if they go for it.