Citing National Security, Trump Blocks Broadcom's Takeover Of Qualcomm
DAVID GREENE, HOST:
President Trump issued a pretty unusual executive order late last night. It was an order to block a corporate takeover, a massive one. This was a bid by the chipmaker Broadcom based in Singapore to buy America's largest mobile chipmaker, Qualcomm. And the reason the president cited for blocking this deal was national security. NPR's Alina Selyukh is here. She's been covering this. And, Alina, I don't know much even about what these companies do, what this deal was about. Can you start there?
ALINA SELYUKH, BYLINE: Sure. So start with the deal. This was what's called a hostile takeover. Broadcom was very aggressively pushing to buy Qualcomm for $117 billion.
GREENE: That's huge.
SELYUKH: This would have been the biggest-ever tech acquisition. And then fundamentally - this will sound dramatic, but it happens to also be true - this takeover was about the future of mobile connections. Qualcomm and Broadcom both make computer chips. And, specifically, Qualcomm makes chips for smartphones. And right now the world is in this race for the new generation of wireless connections. You've probably heard terms like 3G and 4G.
SELYUKH: And now we're in the race to 5G, which is this super powerful connection that will drive the age of Internet-connected everything - your smart speakers, coffee makers, Smart cars.
GREENE: They'll always work perfectly. There'll never be a slowdown in the connection. (Laughter).
SELYUKH: That's the goal. That's the goal.
GREENE: So is that why the White House argument is national security - because there is so much at stake in our lives when it comes to the race to 5G?
SELYUKH: Exactly. Qualcomm is a huge industry leader on wireless. They were actually pioneers in a lot of the previous generations of wireless technology. But these days there's a lot of competition in the world, and some of the biggest rivals are Chinese companies. And these are companies that American intelligence officials often warn about. They talk about intentions of these companies in the U.S., they're potential threats to national security. So when a Singapore-based company like Broadcom comes in and says we want to buy your American chipmaker, whether they want it or not, a lot of red flags go off. And one of them is, what if this new foreign owner cuts cost in investment at Qualcomm and doesn't keep advancing to 5G then at some point the Chinese competition becomes the only available option?
GREENE: That's interesting. OK. So the president here jumps in and says this is a national security concern. Is it rare for a president to get involved in a business acquisition?
SELYUKH: It's fairly unusual, though it has happened before. You'd think for Trump, who is pretty protectionist, you could see why this deal would raise concerns. A foreign company taking over an American firm that's also involved in pretty sensitive technology. This is exactly the kind of deal that his administration might oppose. In his executive order, he cites concerns from a special national security panel, saying there's, quote, "credible evidence" that this buyout would threaten, quote, "to impair the national security of the United States," as you said. But this is also something that does not begin with Trump. Essentially, this pushback on deals that might lead to more Chinese influence have a history of the U.S. government scuttling them.
GREENE: OK. So is this deal done? Is that the end of it?
SELYUKH: Essentially, yes. Normally, as I mentioned, the national security panel, they're called the Committee on Foreign Investment in the United States, does reviews of these foreign takeovers. It is a secretive group, but they have issued concerns. And they essentially stalled this deal before Trump even issued his executive order. They raised national security concerns, and Trump took up their mantle and took their lead.
GREENE: Took the lead. All right. NPR business reporter Alina Selyukh. Thanks.
SELYUKH: Thank you. Transcript provided by NPR, Copyright NPR.