President Donald Trump made it his campaign pitch to put “America First” in his agenda should he make it to the White House. He is now following through with concrete actions as seen through his quick rejection of Chinese-owned Broadcom Ltd’s hostile $117 billion takeover of the American-owned Qualcomm Inc.
Trump’s message is clear in stopping the takeover: for the sake of national security, any deal that could give China an edge in critical technology will be rejected under his watch.
Broadcom may be based in Singapore but as far as the U.S. is concerned, China “loomed large” over the American government’s fears about an unacceptable foreign takeover of chip maker Qualcomm. Qualcomm is a crucial player since it is involved in a neck and neck competition with China’s Huawei Technologies Co. over which company will be the dominant force in developing the next-generation wireless technology.
Scott Kennedy, who studies China’s economic policy at the Center for Strategic & International Studies in Washington, says such move by the Trump administration indeed sends a strong message to China and the world. Kennedy says: “This decision hangs a huge ‘not-for-sale ‘sign on just about every American semiconductor firm. A Chinese entity doesn’t need to be anywhere near a transaction now in semiconductors for the deal to be nixed.”
Blocking Broadcom’s takeover of Qualcomm is also just part of the Trump administration’s broader move to contain China on trade. The U.S. government is also looking into clamping down on Chinese investments in the country and imposing tariffs on a broad range of its imports as a form of punishment to Beijing for its alleged theft of intellectual property.
Trump said in his order released Monday evening in his rejection of the takeover: “There is credible evidence that leads me to believe that Broadcom might take action that threatens to impair the national security of the United States.”
Already Trump is making history in preventing takeovers of American firms. Only five takeovers of U.S. firms have been blocked by U.S. presidents for national security reasons since 1990. Barack Obama blocked two dealing throughout his two terms. Trump has also blocked two in just the short span of six months.