Trump blocks Broadcom's Qualcomm takeover stating national security issues

US President Donald Trump on Monday called off the USD 117 bn takeover by microchip maker Broadcom of Qualcomm, halting what could have been the biggest takeover of the technology sector.

In a major shake-up, US President Donald Trump has blocked the microchip maker Broadcom’s proposal to takeover Qualcomm over security issues.

According to reports, the US government doesn’t want to lose to China, if Singapore-based Broadcom took over the San Diego-based Qualcomm. The Silicon Valley will be no longer be the lead in creating technology and setting standards for the next generation of mobile cell phone communications.

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The announcement has put an end to what would have been the technology industry’s biggest deal ever. However, if the takeover would have been successful, China would've had an upper hand in mobile communications.

According to a statement released by White House, to protect national security, President Donald Trump has ordered that any kind of takeover, merger between chip-making giants Broadcom and Qualcomm is prohibited.

The statement said, “There is credible evidence that leads me to believe that Broadcom Limited, a limited company organized under the laws of Singapore (Broadcom), along with its partners, subsidiaries, or affiliates, including Broadcom Corporation, a California corporation, and Broadcom Cayman L.P., a Cayman Islands limited partnership, and their partners, subsidiaries, or affiliates (together, the Purchaser), through exercising control of Qualcomm Incorporated (Qualcomm), a Delaware corporation, might take action that threatens to impair the national security of the United States.”

The order also states that Broadcom will not be allowed to purchase or merge with Qualcomm in any way and that all of the people Broadcom has proposed to Qualcomm’s board are disqualified.

The report said, “All 15 individuals listed as potential candidates on the Form of Blue Proxy Card filed by Broadcom and Broadcom Corporation with the Securities and Exchange Commission on February 20, 2018 (together, the Candidates), are hereby disqualified from standing for election as directors of Qualcomm. Qualcomm is prohibited from accepting the nomination of or votes for any of the Candidates.”

For the last couple of months, Broadcom has been trying to buy Qualcomm but all of its efforts have been futile. It is also to be noted that Broadcom is planning to move its headquarters to the US, it would be interesting to see what rules will be followed by Broadcom in doing so, and how is Trump administration going to take it.

Recently, the Trump announced Broadcom’s decision to move its headquarters from Singapore to the US in the presence of Hock Tan, Chief Executive, Broadcom.