US President Donald Trump has blocked Singapore-based semiconductor device giant Broadcom Ltd’s proposed takeover of San Diego-based smartphone chip supplier Qualcomm on national security grounds amid concerns that it would give China an advantage in mobile communications.
Qualcomm is a major player in 5G and is estimated to have roughly 15% of 5G-essential patents in the world.
Qualcomm had rejected Broadcom’s $117 billion approach, which was also under investigation by the US Committee on Foreign Investment in the United States (CFIUS) which reviews national security implications of acquisitions of US corporations by foreign companies.
“A shift to Chinese dominance in 5G would have substantial negative national security consequences for the United States,” CFIUS said.
“While the United States remains dominant in the standards-setting space currently, China would likely compete robustly to fill any void left by Qualcomm as a result of this hostile takeover.”
Broadcom said it was reviewing the presidential order.
“Broadcom strongly disagrees that its proposed acquisition of Qualcomm raises any national security concerns,” it said.
The presidential order said: “The proposed takeover of Qualcomm by the Purchaser (Broadcom) is prohibited, and any substantially equivalent merger, acquisition, or takeover, whether effected directly or indirectly, is also prohibited.”