U.S. Blocks Broadcom Takeover of Qualcomm

U.S. Blocks Broadcom Takeover of Qualcomm

Over the weekend, I noted that there is always a bigger fish, referring to the possibility that Intel would prevent Broadcom’s $117 billion hostile takeover of Qualcomm. Well, now it doesn’t need to bother, thanks to an even bigger fish: Citing national security concerns, the president of the United States has signed an executive order blocking the acquisition.

“There is credible evidence … that Broadcom … through exercising control of Qualcomm … might take action that threatens to impair the national security of the United States,” the order explains. “Provisions of law … provide adequate and appropriate authority … to protect the national security in this matter.”

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“On the basis of the findings,” the order continues, “the proposed takeover of Qualcomm by [Broadcom] is prohibited, and any substantially equivalent merger, acquisition, or takeover, whether effected directly or indirectly, is also prohibited.”

Whatever that “credible evidence” of possible national security violations is, it remains a secret. And it’s unclear if the president even knows that Singapore, where Broadcom is based, is not actually part of China, which appears to be the real target of this order. I’m no fan of xenophobia or isolationist policies, which is what this really is.

But no matter: Broadcom’s hostile takeover bid for Qualcomm threatened to disrupt an industry-wide transition to the next era of mobile computing, in which speedy 5G networking will essentially erase the access speed differences between local and remote data. The company had been riding high and innovating quickly, and its acquisition by Broadcom, which has been pushed to the sidelines, threatened to ground everything to a halt.

Broadcom says that it is reviewing its legal options.

“Broadcom strongly disagrees that its proposed acquisition of Qualcomm raises any national security concerns,” a Broadcom statement notes.

 

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Conversation 15 comments

  • toukale

    13 March, 2018 - 9:22 am

    <p>What's funny about this, just five months ago Trump was at the white house celebrating with Broadcom ceo about moving it's headquarters back to the US. My how quick things changed, I guess Broadcom paycheck was not big enough. https://www.youtube.com/watch?v=6i5IzCGO254&amp;app=desktop</p&gt;

    • Polycrastinator

      13 March, 2018 - 11:21 am

      <blockquote><a href="#252627"><em>In reply to toukale:</em></a></blockquote><p>I had been wondering about the HQ move, and whether this might have an effect on this "national security" justification. I don't like the merger, but the NS justification seems.. unlikely. </p>

    • Waethorn

      13 March, 2018 - 11:35 am

      <blockquote><a href="#252627"><em>In reply to toukale:</em></a></blockquote><p>Broadcom hadn't committed to it. The news story stated that if they did move their HQ to the US, the deal might be saved. As such, it's a communication company that exists outside of the US, so they have a valid concern. Most foreign national governments would do the same.</p>

  • arunphilip

    13 March, 2018 - 9:43 am

    <p>I posted this on a forum discussion as well, but it's worth repeating the link to that story. </p><p><br></p><p>There is a nice opinion piece that explains why Broadcom taking over Qualcomm would have been bad for innovation: futurumresearch.com/analysis-broadcoms-offer-buy-qualcomm-terrible-idea/&nbsp;</p><p><br></p><p>Firstly, Broadcom is not the Broadcom of old, it was itself taken over by Avago which then renamed itself to Broadcom. This new avatar of Broadcom focuses on short-term profit over long-term R&amp;D investment.&nbsp;</p><p><br></p><p>So, irrespective of the reasons behind the WH decision, from a technologist's standpoint, its probably a good thing the takeover didn't go ahead.&nbsp;</p><p><br></p><p>I've always had a slightly negative view towards Qualcomm due to the ways it has flexed its licensing muscle, but this article has made me appreciate the company for its R&amp;D commitment.&nbsp;</p><p><br></p>

    • Bart

      Premium Member
      13 March, 2018 - 10:02 am

      <blockquote><a href="#252631"><em>In reply to arunphilip:</em></a></blockquote><p>It is a good piece you mention in your comment, but…. there are a lot of assumptions. </p><p>We simply have no idea how Broadcom would integrate Qualcomm, if they would at all. So though I appreciate the experience about Broadcom from the past, it tells us very little about the future.</p>

      • Paul Thurrott

        Premium Member
        13 March, 2018 - 10:04 am

        <blockquote><a href="#252651"><em>In reply to Bart:</em></a></blockquote><p>Doesn't matter now. We don't have to worry about this any more, thankfully. </p>

  • Bart

    Premium Member
    13 March, 2018 - 9:58 am

    <p>Paul, "<span style="color: rgb(0, 0, 0); background-color: transparent;">But no matter: Broadcom’s hostile takeover bid for Qualcomm threatened to disrupt an industry-wide transition to the next era of mobile computing, in which speedy 5G networking will essentially erase the access speed differences between local and remote data." How do you figure?</span></p>

    • Paul Thurrott

      Premium Member
      13 March, 2018 - 10:04 am

      <blockquote><a href="#252640"><em>In reply to Bart:</em></a></blockquote><p>5G networking will be so fast that accessing your data in the cloud will basically be as fast as accessing it on the local disk. This is a revolutionary change.</p>

      • lvthunder

        Premium Member
        13 March, 2018 - 10:39 am

        <blockquote><a href="#252652"><em>In reply to paul-thurrott:</em></a></blockquote><p>It is also marketing speak and hype until it is demonstrated somewhere out in the real world.</p>

  • Jeffery Commaroto

    13 March, 2018 - 10:13 am

    <p>I feel like this is Al Capone being brought down by tax evasion. The "national security" implications may simply be that our standing in developing 5G wireless was at threat from Broadcom coming in and axing long-term dev for short-term gain. Who knows. It seems flimsy as a security issue without knowing any more details.</p><p><br></p><p>In terms of the larger world of computing/connectivity, our economy and the future, we are better off not having this and other mega mergers/takeovers go through. More competition is necessary to drive innovation, lower prices and see greater employment and competitive wages. We have endless examples of innovators being acquired/taken over and then being gutted and left for dead. I have heard many politicians talk about the need for action in blocking all of this consolidation on many different grounds. This is one of the few examples of actual action, even if the line of thinking presented is a bit askew. </p>

  • lvthunder

    Premium Member
    13 March, 2018 - 10:41 am

    <p>Who knows what kinds of contracts Qualcomm has with the federal government or the military. That could be some of the national security concerns as well.</p>

  • TheOneX

    13 March, 2018 - 2:01 pm

    <p>Don't much care about the reasoning behind it this is a good thing. We should not support merging of companies as such mergers often lead to less diversity, competition, and innovation. It is better to have 5 or 6 smaller companies than 2 or 3 large companies. It is also typically better for companies to privately owned as private owners tend to have motives outside of just short term wealth accumulation.</p>

  • Matt Lohr

    13 March, 2018 - 4:45 pm

    <p>"And it’s unclear if the president even knows that Singapore, where Broadcom is based, is not actually part of China, which appears to be the real target of this order.&nbsp;I’m no fan of xenophobia or isolationist policies, which is what this really is."</p><p><br></p><p>Swerving out of your lane, Paul.</p>

    • ejryder3

      13 March, 2018 - 5:07 pm

      <blockquote><a href="#252851"><em>In reply to Matt Lohr:</em></a></blockquote><p>Agreed. </p>

  • red.radar

    Premium Member
    14 March, 2018 - 12:35 pm

    <p>Does this make Qualcomm untouchable from an acquisition stance? </p>

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