The White House has blocked Broadcom’s $117 billion bid for Qualcomm due to national security concerns.
In an order Monday, President Donald Trump wrote that there is “credible evidence” that Broadcom and its affiliates “might take action that threatens to impair the national security of the United States.”
He said the two companies must “immediately and permanently abandon the proposed takeover.”
Broadcom’s hostile takeover of Qualcomm — the latter company rejected the bid — would have combined two computer chip makers. It had been under investigation by the Committee on Foreign Investment in the United States, or CFIUS. The inter-agency panel is chaired by the Treasury Department and vets deals that could give a foreign investor control of a US business.
Broadcom primarily makes chips for wired broadband communications, such as modems, Wi-Fi, switches and routers. While its operating headquarters are in California, the company reincorporated in Singapore a few years ago. It said last November that it would move its legal headquarters back to the United States.
The move had been scheduled for May, but the company said Monday that it now expects to complete it a month early.
Last week, the government laid out a series of concerns about the potential merger in a letter to the two companies.
CFIUS disclosed that it was looking at “the risks associated with Broadcom’s relationships with third party foreign entities,” as well as the “national security effects of Broadcom’s business intentions with respect to Qualcomm,” according to the memo, which was written by a Treasury Department official.
The letter said one big concern is that a takeover would cause the United States to fall behind on the development of 5G technology and allow China to take the lead. Qualcom is known for inventing 2G and 3G wireless network technology, and it has been investing heavily in 5G research.
Broadcom then claimed that if it acquired Qualcomm, it would commit to making the United States “the global leader in 5G.” The company added that it would create a new $1.5 billion fund to train US engineers.
Treasury Secretary Steven Mnuchin said in a statement Monday that the decision was based on “national security sensitivities” and was “not intended to make any other statement about Broadcom or its employees, including its thousands of hard working and highly skilled U.S. employees.”
Broadcom and Qualcomm did not immediately respond to a request for comment about the White House’s decision.
