U.S. President steps in and quashes concerns about losing wireless tech edge to foreign companies
SAN JOSE, Calif. — U.S. President Donald Trump issued a surprise order prohibiting Broadcom from acquiring Qualcomm and disqualifying its proposed slate of board directors in a proxy vote. Broadcom said it is “reviewing the order” and that it “strongly disagrees that its proposed acquisition of Qualcomm raises any national security concerns.”
The move presumably ends months of maneuvering between the two companies over a $117 billion deal that would have been the largest merger in semiconductor history. Trump’s order cited a letter from the U.S. Committee on Foreign Investment in the U.S. (CFIUS) that said the acquisition could threaten the U.S. position in wireless communications standards, patents and products.
Trump’s order requires Qualcomm to convene a postponed 2018 stockholders meeting within 10 days. Qualcomm set the meeting for March 23.
The decision came despite Broadcom’s pledge to keep the U.S. a leader in 5G cellular in a response to the CFIUS letter last week. The company noted its longstanding investments in core communications technologies such as its leading Ethernet switches.
To reassure concerns about losing dominance in wireless technology to China, Broadcom also pledged to create a new $1.5 billion fund to train and educate engineers in the U.S. In addition, Broadcom said it “is in every important respect an American company,” and called Qualcomm’s patent licensing practices “predatory and anticompetitive.”
It’s not clear if Broadcom has any avenue to challenge the presidential order. In early November, Broadcom CEO Hock Tan met with President Trump to announce the company’s headquarters will move from Singapore to the U.S., a process Broadcom recently said it could complete early next month.
Trump’s order clears a path for Qualcomm to remain independent. It is waiting for China’s approval of its own $44 billion bid to acquire NXP. Just how it will resolve ongoing patent disputes with Apple and an unnamed customer believed to be Huawei remains to be seen.
The Qualcomm bid was the latest and largest of a streak of Broadcom acquisitions. The former Avago bought LSI before it acquired Broadcom, changing its name. Within months it also acquired switch maker Brocade.
— Rick Merritt, Silicon Valley Bureau Chief, EE Times