The US government has blocked Broadcom’s proposed $140 billion takeover of rival Qualcomm on national security grounds.
Issuing a Presidential Order to halt the deal, President Donald Trump said there was credible evidence that the controversial acquisition, which would be the largest in the history of the technology sector, would impact the country’s national security.
Qualcomm has so far rejected Broadcom’s advances, claiming that the offers to date were not satisfactory, leading to the possibility that a hostile takeover could be on the cards. In any case, the combination would have attracted the attention of competition authorities.
There have been concerns within the mobile industry that a Broadcom takeover would delay the rollout of 5G, such is Qualcomm’s influence. The vast majority of flagship smartphones are powered by Qualcomm’s chips and at Mobile World Congress (MWC) last month, the company detailed its latest plans for next generation networks.
The perception is that Broadcom is more concerned with acquisitions than R&D, and any let up could allow Huawei to leapfrog Qualcomm, and thereby the US, in 5G.
The takeover had already been under investigation by the Committee on Foreign Investment in the US (CFIUS), which stated that Broadcom had spent six times as much on acquisitions than development over the past 12 years and that it underinvested in long term product development.
Huawei’s telecommunications network equipment has long been banned in the US, so ceding the US’s leadership to the firm would be unpalatable to Washington.
“Qualcomm has become well-known to, and trusted by, the US government,” said the CFIUS earlier this month. “Having a well-known and trusted company hold the dominant role that Qualcomm does in the US telecommunications infrastructure provides significant confidence in the integrity of such infrastructure as it relates to national security.
“Reduction in Qualcomm’s long-term technological competitiveness in standard setting would significantly impact US national security. This is in large part because a weakening of Qualcomm’s position would leave an opening for china to expand its influence on the 5G-setting process.”
Qualcomm has confirmed it has received the notice, while Broadcom has yet to respond to TechRadar Pro’s requests for comment.
Adding further complexity to the tale is that Qualcomm is currently trying to buy Dutch semiconductor firm NXP, while reports over the weekend suggested that Intel, the world’s largest chip manufacturer, was now interested in Qualcomm.