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Singapore-based semiconductor company Broadcom has been engaging in a hostile takeover bid for Qualcomm, well known to us for their Snapdragon range of processors.
With Broadcom offering more than $120 billion to purchase Qualcomm, there is little doubt Qualcomm would have felt a massive squeeze after the purchase as Broadcom worked to recoup their investment.
That move could have endangered fledgeling partnerships such as Microsoft’s Windows 10 on ARM Always Connected PC initiative, but now, in one fell swoop, President Trump has put an end to that concern, as he issues an order blocking any merger between the two companies on national security grounds.
Trump’s order states that there is “credible evidence” that a Broadcom-led Qualcomm “might take action that threatens to impair the national security of the United States.”
The deal was not popular in Silicon Valley. Microsoft and Google are both opposed to the deal, as it would primarily benefit rival Apple and would interfere with Qualcomm’s 5G investment. Broadcom reportedly has a reputation for cutting costs instead of investing in new technology, something more likely if they take on massive debt to purchase Qualcomm. Microsoft and Google perceive an independent Qualcomm as being more closely aligned with their interests than a Broadcom-owned Qualcomm that is in bed with Apple. Qualcomm is currently involved in intense litigation with Apple around patents and accusations of anti-competitive behaviour.
After being rebuffed Broadcom has been stacking Qualcomm’s board with members friendly to the deal. The order forbids any merger or purchase and states that all Broadcom’s men be disqualified from Qualcomm’s board.
Broadcom is currently moving its headquarters to USA and has objected against the order, saying “US national security concerns are not a risk to closing, as Broadcom never plans to acquire Qualcomm before it completes redomiciliation.”
It is likely however that they would have to take it to court before the order could be overruled, as the order suggests the two companies “permanently abandon the proposed takeover.”
Via the verge