Donald Trump has blocked Broadcom’s (NASDAQ: AVGO) takeover attempt of the chipmaker Qualcomm (NASDAQ: QCOM).
The US President has put a stop to what would have been the biggest-ever tech deal, citing concerns of national security.
According to Trump, the long-awaited $140 billion (£100 billion) deal between Singapore-based Broadcom and Qualcomm “threatens to impair the national security of the US”.
“The proposed takeover of Qualcomm by the Purchaser is prohibited, and any substantially equivalent merger, acquisition, or takeover, whether effected directly or indirectly, is also prohibited,” it reads on the Presidential order, which is signed by Trump.
This move comes contrary to Trump’s comments about Broadcom last November when he called the group “one of the great, great companies”, which he was “thrilled” to welcome to the US.
If the takeover had taken place, the new group would have been the world’s third-biggest chipmaker after Samsung (KRX: 005930) and Intel (NASDAQ: INTC).
In response to Trump’s decision, Broadcom has said it is reviewing the case and “strongly disagrees that its proposed acquisition of Qualcomm raises any national security concerns”.
According to some experts, the move has been made due to issues of competition, rather than security.
Mario Morales, vice president of enabling technologies and semiconductors at global research firm IDC, said: “Given the current political climate in the US and other regions around the world, everyone is taking a more conservative view on mergers and acquisitions and protecting their own domains.”
“We are all at the start of a race, and you have 5G as a crown jewel that everyone wants to participate in – and every region is racing towards that.”
“Semiconductor technology and companies like Qualcomm will be an important weapon in that 5G arms race [and] the US like other nations and regions want to be first,” he added.