The U.S. president Donald Trump declared an executive order to block Qualcomm-Broadcom. And It was stuck on Monday. The deal between Qualcomm and Broadcom was to merge their corporates. Broadcom offered $117 billion to buy leading U.S. chipmaker, Qualcomm. Trump pointed the agreement was the threat to the National Security. President Trump stated that they have evidence to believe that Broadcom through Qualcomm. And it can take action to threaten the national security of the U.S.
The main reason behind the executive order is the United States is also concern on 5G Technology. The deal between Qualcomm and Broadcom can boost the influence of China in 5G Technology.
Technology, trade, and getting jobs
Likewise, Trump is also focusing more often on the security. Technology, business, and getting jobs back to the United States is critical to him. Trump’s concern with the security, technology, and trade. And is the main reason behind the blockade.
The order issued by the committee on Foreign Investment expressed concern. And was takeover could leave the U.S behind in mobile Technology. The president laws on the subject came before Broadcom and Qualcomm agreed to the deal.
Among the controversial deal, Broadcom withdrew its bid on Wednesday. After the fall on the $117 billion deal, both corporate’s shares have also dropped. Broadcom’s shares have decreased by 1% while Qualcomm shares are on a 7% drop.
CFIUS
The CFIUS had warned that Broadcom might slash Qualcomm spending And to the pursuit of short-term profits. The deal can put Qualcomm at a disadvantage in the race to offer the next-generation technology. It could lead to giving the advantage to Huawei Technologies Co. Ltd., which has ties with the Chinese government.
Frank Aquila said, “Trump decision could change how companies will view cross-border deals.” This event can also lead to the cross-border holding transactions in sensitive sectors.
Details of the national security risk are around 5G mobile technology. Qualcomm is ahead of the domestic and foreign company in 5G technology. Qualcomm’s deal with Broadcom can lead to a reduction in long-term technology. “Reduction in Qualcomm’s technology and influence would impact US national security,” CFIUS said. The agents specified foreign investment in 5G from telecom giant Huawei will be the potential threat.
A white house official said, “national security of the deal related to risk with Broadcom’s relationship with foreign bodies.” Broadcom also said that they disagree with the proposed acquisition of Qualcomm. And will raise any national security concern.
Broadcom and it’s deal
The particular deal complicated because the Broadcom situated in Singapore. The companies based in the U.S seems to get more diluted by the combination of two large companies rather than getting stronger.
Furthermore, this is the second time president Trump did not allow a significant international deal due to national security concern. I am the fifth time a U.S. president has done so. It also seems that the U.S. Authorities are dealing with international deals when it comes to China. The Second deal Trump stopped indeed since he became president of the United States.