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Monday, May 20, 2024 | Back issues
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Trump Blocks Tech Company Merger Citing National Security

President Donald Trump thwarted a deal between two computer chip manufacturers citing national security concerns.

(CN) - President Donald Trump thwarted a deal between two computer chip manufacturers citing national security concerns.

Trump issued an order on Monday blocking the potential merger between Singapore-based Broadcom and Qualcomm — headquartered in San Diego, California — signaling yet another protectionist move for the Trump administration rapidly aligning more firmly against the globalist economic model.

“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,” Trump said in the order.

Trump said the order follows recommendations issued by the U.S. Committee on Foreign Investment (CFIUS).

It isn’t the first time the Trump administration has taken such an action, as it blocked a Chinese-based semiconductor manufacturer from buying a competing American firm last September.

Trump’s most recent order prevents any type of merger between the two large technological companies, while further disqualifying the individuals recommended by the Singapore-based company from serving on Qualcomm’s board.

Broadcom has been attempting to take over the American based chip-manufacturer for several months and is apparently poised to fight Trump’s recent decision.

“Broadcom, which is in all important respects a U.S. company, has been repeatedly approved by CFIUS in its previous acquisitions of U.S. companies and has always engaged productively with CFIUS to ensure U.S. national security is protected,” the company said in a Monday release.

Broadcom said it is attempting to establish its headquarters in the United States by April, a process it calls redomiciliation, which it says will render it an American company and allay any national security concerns.

But Trump’s order appears not to grant latitude for that possibility, saying the two companies “shall immediately and permanently abandon the proposed takeover.”

Beyond national security concerns, technology industry insiders have expressed skepticism regarding the deal based on antitrust grounds.

The move comes on the heels of Trump’s announcement that he will implement tariffs on foreign steel and aluminum companies in a bid to resurrect manufacturing of those commodities in the United States.

Implementing the tariffs has received mixed reviews, while critics are also condemning Trump’s latest order as a highly unusual amount of government interference in the private sector.

However, some economists see the order as a necessary move to stave off China’s attempt to gain a technological advantage over the United States in the technology sector, citing Broadcom’s links to the Chinese government.

Trump and his administration have said that Qualcomm’s role in moving America to the next generation of cellular communications called 5G is too critical to the health of the nation and its economy to tolerate any foreign interference.

“China would likely compete robustly to fill any void left by Qualcomm as a result of this hostile takeover,” Aimen Mir, a United States Treasury official, told the companies last week.

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Categories / Business, Government, Technology

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