U.S. Blocks Broadcom Takeover of Qualcomm

Posted on March 13, 2018 by Paul Thurrott in Android, Hardware, Mobile with 15 Comments

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.”

“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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Comments (15)

15 responses to “U.S. Blocks Broadcom Takeover of Qualcomm”

  1. toukale

    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&app=desktop

    • Polycrastinator

      In reply to toukale:

      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.

    • Waethorn

      In reply to toukale:

      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.

  2. arunphilip

    I posted this on a forum discussion as well, but it's worth repeating the link to that story.


    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/ 


    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&D investment. 


    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. 


    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&D commitment. 


  3. Bart

    Paul, "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?

  4. Jeffery Commaroto

    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.


    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.

  5. lvthunder

    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.

  6. TheOneX

    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.

  7. Matt Lohr

    "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."


    Swerving out of your lane, Paul.

  8. red.radar

    Does this make Qualcomm untouchable from an acquisition stance?

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