Broadcom-Qualcomm Takeover Blocked By White House on National Security Grounds
by Ryan Smith on March 12, 2018 8:40 PM EST- Posted in
- Legal
- Qualcomm
- Broadcom
- Semiconductors
- Acquisition
Stepping into the increasingly wild saga that has been Broadcom’s efforts to purchase Qualcomm, the US government is now weighing in by issuing a new order to block the merger of the two companies. Citing national security concerns with the Singapore-based Broadcom acquiring the US-based Qualcomm, President Trump issued an order under the Defense Production Act of 1950 to prohibit the proposed acquisition or any similar transaction, effectively ending Broadcom’s acquisition efforts.
Given what would have potentially been the largest acquisition to date in the technology industry, Broadcom’s acquisition efforts had already attracted the attention of Committee on Foreign Investment in the United States (CFIUS), who was investigating the buyout. However in exercising his own authority based on the CFIUS’s recommendations, the President has blocked the merger on national security grounds, citing that through their ownership of Qualcomm, Broadcom “might take action that threatens to impair the national security of the United States.”
As a result of the presidential order, Broadcom’s purchase efforts are on hold for the time being, if not forever. The order requires the two companies to immediately stop any and all merger activity, and to unwind any efforts they’ve taken thus far, reporting to the CFIUS on their progress. Furthermore the candidates that Broadcom was running for Qualcomm’s board of directors are barred from participating in that election, and Qualcomm cannot accept their nominations.
The President's order does not go into detail about the national security concerns he and the CFIUS have with the potential deal. But the Washington Post, citing a letter from the CFIUS sent to the companies’ attorneys sent over the weekend, notes that “it was concerned research and development at Qualcomm might atrophy under Broadcom's direction” and that Qualcomm rivals such as Huawei “might become much more dominant around the world” as a result.
As the framework blocking the acquisition is a presidential order, it cannot be appealed and this block is seemingly permanent. However as Broadcom has already been going through great lengths to acquire the company, including planning to redomicile to the US so that the acquisition was no longer a foreign deal, it might yet prove too early to rule them out entirely.
Update 3/14: Broadcom has formally ended its efforts to acquire Qualcomm, noting that the offer has been "withdrawn and terminated." Interestingly however, the company still intends to go ahead with their redomiciliation plans, which were originally only undertaken in order to improve the chances of the buyout being approved.
Source: The White House
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mr_tawan - Monday, March 12, 2018 - link
What came to my mind after seeing this comment is, if Intel buys Qualcomm, it might discontinue the snapdragon line of processor and will convince the OEMs to use x86-base solutions instead.Of course, it doesn't make sense to do so, given that the popularity of Snapdragons nowadays.
HStewart - Monday, March 12, 2018 - link
You really think so - with Intel struggling in the phone market - and QUALCOMM doing well - it most like would that both x86 and QUALCOMM would share benefits from each other.That what I would do if I was Intel - but then again I am not.
SleepyFE - Tuesday, March 13, 2018 - link
Yes, when companies buy competitors they never tank their product, they just double the R&D spending and work on both (in case you didn't get it that was sarcasm). If Intel gets Qualcomm it will patent troll everyone and force them to use an x86 CPU if they wan't to use any other patented mobile tech from their portfolio. Best case scenario, they will just kill the snapdragon line and everyone will make a switch to mediatek or some other basic ARM implementation without consequences.Samus - Tuesday, March 13, 2018 - link
They should all stay independent. Competition is good. At least when AMD\Intel decide to get into the SoC game and Qualcomm decides to make a real push for HPC, competition will be good.A Broadcom merger would mean less competition in the radio, networking and controller space. I'm not a huge Qualcomm fan (they often refuse to license IP in effect cockblocking competition, lately have shown some trollish behavior with their patents, and have been caught doing under the table shenanigan deals with vendors.)
This is a good, but unsurprising, move by the white house. Honestly, no administration would likely let a merger of this caliber go forward.
FunBunny2 - Tuesday, March 13, 2018 - link
"They should all stay independent. Competition is good."not for the capitalist. that's why they buy each other at the first opportunity. or change law to support monopoly. Disney got copyright extended to near infinity just to make more money:
"When the Copyright Act was first enacted in the United States, the copyright duration was only 14 years. Today Copyright duration can last over a century in some cases. Why such a drastic change? Some say it is all due to a cute little mouse named Mickey."
here: https://atp.orangenius.com/how-mickey-mouse-keeps-...
Tams80 - Wednesday, March 14, 2018 - link
Yes, competition is good.Broadcom also do less R&D than Qualcomm. Networking will move forward much slower if Broadcom buy Qualcomm and Qualcomm don't even want to be bought.
FullmetalTitan - Wednesday, March 14, 2018 - link
Only the stock holders with their eyes at their feet were even considering it, hence the proxy vote to install Broadcom nominees to the Qualcomm board. If investors weren't always chasing the profits for JUST next quarter, they would make more informed decisions.I hate this administration and would like to see every single member in a jail cell, but for one time in his miserable life, this purported "business genius" actually made a smart business move on behalf of American workers.
ZolaIII - Tuesday, March 13, 2018 - link
Emulation won't work so M$ must start trying harder & ensure native and equal ecosystem or they can vanquish as much as I am concerned. Not a single regular ever will give it's approval to a deal that would totally monopolise market as Intel purchase of QC/BC. Broadcom takeover by all means whose Apples try to get it by a third side they have control of. QC made a mistake not buying Imagination & ruining Apple, which by the way is now in Chinese hands (which is a good thing). Intel do need to wake up quickly & buy bunch of fables semiconductor manufacturers in the same time expanding its IP and product portfolio rapidly alongside with foundery business as the ship is sinking fast. Only increase if Intel did make takeover would be a price increase, uncompetitive practice & monopoly of the worst kind. We got stuck hire for 30 years because Intel used all of that so that X86 is dominant & proclaiming how many core's is something we don't need. Now they can't neither block nor neglect RISC which always whose better & will become dominant one way or the other.The full scale China semiconductor take over will happen sooner or later no matter how much effort someone (we know who) tries to block it & critical moment for that to happen is rather closing fast as semiconductor is beginning to collapse as Mors low is at the end of life & they can't provide significant enough advances to the new product so that consumers could justify buying them. Take over will made one time extension of the Mors low (two years period) simply by cutting prices in half. Any how takeover won't resolve anything it may buy enough time for DUV development that will extend it for one more cycle, then again all around gate combined with SOI wafers culd do a cycle more. Anyway China takeover is better than collapse of semiconductor industry and you can bet that banker's whose money is in it won't care much of the politics when it comes that they ensure that the things remain as they are & that they are in control.
All of this will happen in next 10 years. At the end let me explain something; having fab in China & Chinese worker's in it doesn't mean someone can put something into your valid design, it's not a f***ing drink. Sure it opens the door to China & it's government and pretty much everyone else (historical backed) to make what ever they need or want bricking the last technology holy grail that whose monopolised for a long time as the other two (nuclear & space/inter ballistic) one's doesn't stand for quite some time. So at the end it's all about might & power as always & never in the good manner.
LordSojar - Tuesday, March 13, 2018 - link
This would basically give Intel a monopoly on ARM SoCs. This is a plainly bad idea. This benefits Intel, in theory, but they've not exactly executed well in the ultra mobile space... suffice to say. This doesn't benefit Qualcomm very much at all.It's very important for consumer pricing that Intel, Qualcomm and AMD stay separate. In fact, it's imperative.
HStewart - Tuesday, March 13, 2018 - link
"This would basically give Intel a monopoly on ARM SoCs. This is a plainly bad idea. This benefits Intel, in theory, but they've not exactly executed well in the ultra mobile space... suffice to say. This doesn't benefit Qualcomm very much at all."Ok lets look at this logically, Intel does have any ARM - but you state if Intel buys Qualcomm then they will have a monopoly on ARM. This of course means Qualcomm always has a monopoly - and with Microsoft Windows for ARM only working on Qualcomm - that could be possibly. Or by stating that Intel will create monopoly on ARM, does that mean under Intel direction does this mean other ARM's including Apple's would also no longer exist.
To me the assumption that Intel will create monopoly is a very bias and inaccurate statement. Intel even though I like them for x86 products does not have a foot hold in the ARM market.