Donald Trump has quashed Singaporean chipmaker Broadcom’s proposed takeover of US rival Qualcomm, pointing to concerns about national security.
His presidential order claims there is “credible evidence” to suggest Broadcom “might take action that threatens to impair the national security” of the US if it owns Qualcomm.
The proposed deal was worth $140bn and would have been the biggest tech takeover on record. But Trump has ordered both firms to immediately abandon the sale. The order also bans Broadcom’s nominees from standing for election to Qualcomm’s board.
Broadcom said in a statement it “strongly disagrees that its proposed acquisition of Qualcomm raises any national security concerns”. Qualcomm has not yet commented on the order.
Qualcomm is currently the third biggest chipmaker in the world after Intel and Samsung, but is considered by many analysts to be the leader in developing 5G chips, followed by Broadcom and Chinese telecoms giant Huawei.
Broadcom is not seen to be as strong on 5G R&D as Qualcomm and some analysts fear if it takes over the firm, Huawei, which has already spent $600m on 5G, could become the market leader.
Last month, the heads of the CIA, FBI and NSA warned American citizens about buying Huawei’s products, citing alleged links to the Chinese government. Responding to the intervention, Richard Yu, CEO of Huawei Consumer Business Group, said the US was using politics to stifle competition.
In November, Broadcom promised to move its headquarters to the US, prompting Trump to describe it as “one of the really great, great companies” and its CEO as a “highly, highly respected man, a great, great executive”. But the House Committee which advised the president on the deal does not appear to have been satisfied by its efforts.