Trump blocks Qualcomm takeover by Broadcom for national security reasons

US President Donald Trump on Monday evening decided to issue an order halting Broadcom’s acquisition of chipmaker Qualcomm. In the order, he cites national security as the reason.

In the order, the president states that there is no other option to guarantee national security and that he has “credible evidence” that a security risk is being created. Furthermore, the document states that Qualcomm is to hold its annual shareholders’ meeting in the next ten days. The company, together with Broadcom, must close the acquisition and provide written evidence of this once the move is taken.

Both companies will then have to demonstrate on a weekly basis that they comply with the terms of the order. This includes not only the current acquisition, but also any similar or equivalent acquisitions or acquisitions. Broadcom offered Qualcomm $117 billion, making the acquisition the largest in tech.

Broadcom, headquartered in Singapore, has responded briefly to the development with its own message. In it, the company says it is investigating the injunction and says it disagrees that the acquisition of Qualcomm poses a threat to US national security.

A US government agency, Cfius, had previously warned in a letter that the takeover poses security risks. The letter stated that Broadcom had violated a previous agency order by relocating Broadcom’s headquarters from Singapore to the US more quickly. Broadcom would thus have deliberately shortened the duration of Cfius’ investigation.

Earlier it became clear that Cfius was investigating the possible share transaction. Cfius recently interfered with the acquisition plans on behalf of the ministry by demanding that the Qualcomm shareholders’ meeting scheduled for March 6 be postponed by at least 30 days. National security concerns are related, among other things, to the expectation that Qualcomm’s R&D budget will be severely curtailed following its acquisition by Broadcom. This would weaken Qualcomm’s position in the field of 5G standardization and technology, for example, giving Chinese companies more room to fill the gap.