President Trump preemptively blocks Broadcom's Qualcomm takeover, citing national security concerns

The seemingly never-ending saga of Broadcom's attempted takeover of Qualcomm has all-but-ended, as President Trump today issued an order that the deal will not be allowed to go through under the assertion that it would be a threat to U.S. national security. Broadcom is primarily a Singapore-based company, but operates globally. Qualcomm and Broadcom have been dancing around the details of a potential merger or takeover for several months, but in recent weeks had clearly been nearing a deal as Broadcom finalizes moving its headquarters to the U.S.

There's a ton of required legal-speak in here, but it's very clear that the executive branch is not interested in this type of deal going through in any form, and no representatives of Broadcom are to be allowed to be on the Board of Directors at Qualcomm:

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.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.[Broadcom] and Qualcomm shall immediately and permanently abandon the proposed takeover. Immediately upon completion of all steps necessary to terminate the proposed takeover of Qualcomm, the Purchaser and Qualcomm shall certify in writing to the Committee on Foreign Investment in the UnitedStates (CFIUS) that such termination has been effected in accordance with this order and that all steps necessary to fully and permanently abandon the proposed takeover of Qualcomm have been completed.

The decision to completely shut down this takeover before it happens comes just a couple of months after Huawei was effectively shut out from selling its latest smartphones, including the Mate 10 Pro, with U.S. carriers under pressure from the U.S. government. Further action has been taken to limit or completely eliminate the use of Huawei and ZTE equipment — both phones and network routers — by any U.S. government agency. Those actions were also taken in the name of "national security" concerns.

It can easily be argued (and I'm happy to make the argument, personally) that the Broadcom takeover of Qualcomm would not improve products or innovation in the wide variety of technologies that they both produce. The takeover could reduce competition and potentially jeopardize some of Qualcomm's large U.S.-based operations, but none of those reasons are being cited as part of this order. Of all the reasons for this deal to be stopped, "national security" seems the least scrupulous.

Andrew Martonik

Andrew was an Executive Editor, U.S. at Android Central between 2012 and 2020.