President Donald J. Trump’s move to block the takeover of chipmaker Qualcomm by Singapore-based Broadcom marks a rare instance in which a U.S. president has intervened to prevent the foreign acquisition of an American firm.
In a presidential order, Trump said there was “credible evidence” to show the takeover might “impair the national security of the United States.” The deal, valued at around $146bn (FT), would have been the largest technology takeover ever.
There are concerns, however, that the block was due to China potentially leading the development in 5G wireless technology. The two companies running head-to-head in this race are U.S.-based Qualcomm and China-based Huawei (New York Times).
“While the United States remains dominant in the standards-setting space currently, China would likely compete robustly to fill any void left by Qualcomm as a result of this hostile takeover,” according to a March 5 letter from U.S. Treasury Department official Aimen N. Mir, deputy assistant secretary for investment security.
“A shift to Chinese dominance in 5G would have substantial negative national security consequences for the United States,” Mir wrote.
We want your help reporting on the significance of this move, and what it means for the technological race over the future of 5G.
Tell us what should be in the storyTalk
Key facts central to the story
- Qualcomm and Broadcom are among the most important producers of semiconductors and mobile chipsets. Their markets combined would have been worth in billions of dollars.
- Politico reported that the decision to block the buyout came after the Committee on Foreign Investment in the United States determined that the takeover would diminish Qualcomm’s investment in 5G technology, which would play to China’s favor.
- In January, Trump’s national security team considered nationalizing a 5G network to counter China’s threat to U.S. cybersecurity. The idea was rejected by lawmakers and top regulators for being costly and counterproductive to the United States winning the 5G race.
- 5G is considered a national security priority by the White House (Tech Crunch).
Add to this WikiProjectEdit
Questions we’d like to explore
- What’s unique about this potential hostile takeover?
- What’s the significance of Trump blocking the potential buyout?
- What is 5G and why is it so important?
- How does this government intervention change the flow of future tech acquisitions?
- Which company will lead the 5G race now that the deal has been prevented?