President Donald Trump ended what would have been one of the largest tech buyouts in history, ordering Qualcomm and its proposed buyer, Broadcom, to abandon their proposed deal. The purchase price was $117 billion.
In a statement released from the White House on Monday, the president said, “There is credible evidence that leads me to believe that Broadcom Limited, a limited company organized under the laws of Singapore (Broadcom)…through exercising control of Qualcomm Incorporated (Qualcomm), a Delaware corporation, might take action that threatens to impair the national security of the United States.”
Although the Trump administration refrained from detailing any specific risks in the statement, the Committee on Foreign Investment in the United States had expressed concern that Qualcomm’s overtaking might give an edge to foreign manufacturers of mobile chips.
Qualcomm is known for its innovation and providing chips for smartphones and other devices. Even their website boasts, “There’s a reason you can’t stop staring at your smartphone. And we had everything to do with that.”
The CFIU warned of their reservations over the merger in a March 5 letter to attorneys for the two companies. But the Trump administration took action before the committee issued its official recommendation on the matter, which was due to the White House in weeks.
Hock Tan, chief executive at Broadcom, met with President Trump in November, announcing that his company’s legal headquarters would be moving to the United States from Singapore. The move was speculated to be an avenue to garner favor in the U.S. for the company’s proposed Qualcomm merger.
But Tan denied any connection at the time, saying “We think very long term. What we perceive is that the business environment has steadily improved. As we want to grow our business in the long term, that makes it easier to choose to redomicile in the U.S. to sustain our growing trends.”
While Broadcom’s interests and business dealings are primarily in the United States, its legal base is in Singapore due to the low corporate tax rates in the country.
In November, there was talk that the U.S. might stop the deal for anti-trust reasons, but regulators instead cited concerns over the risks to American tech development if foreign corporations buy out such firms.