US President Donald Trump on Tuesday blocked a proposed deal for Singapore-based Broadcom to acquire US telecoms equipment maker Qualcomm. The move was striking for a number of reasons, including the fact that the entities had yet to agree to a deal in the first place, and that Broadcom was in the process of relocating its headquarters to the United States.
Such an agressive action to block an acquisition was unprecedented, as deals are usually reviewed later in the process if national security concerns arise. This particular case underscores just how worried the United States is about Chinese telecoms giant Huawei.
Some analysts credited the move to block the takeover with dragging the tech sector down in trading on Tuesday. The S&P 500 technology sector shed more than 1%.
On the mysterious Huawei connection, from Bloomberg:
What role did Huawei have in the Broadcom/Qualcomm deal?
None. Huawei — never an aggressive acquirer — had no direct role in the deal negotiations. But it loomed over the talks because of its growing influence.
So why the worry about Huawei?
CFIUS is concerned that Broadcom would cut back on R&D funding at Qualcomm, strengthening Huawei at a time when rivals from Ericsson to Nokia are grappling with weak telecoms spending. That theoretically gives Chinese companies such as Huawei and closest rival ZTE Corp. the upper hand in steering the direction of wireless communications development, thereby — so the argument goes — jeopardizing U.S. national security. CFIUS’s concerns over the deal are said also to stem from Broadcom’s ties to Huawei, which was blacklisted in 2012 along with ZTE when the U.S. House Intelligence Committee cited security risks posed by the companies.
The Broadcom-Qualcomm deal wasn’t even a Chinese takeover, but attracted intense scrutiny from Washington out of a fear of China’s rising influence in the tech sector. Chinese automaker Geely’s surprise move to become Daimler’s largest shareholder has apparently been setting off alarm bells in Berlin as well.
“What’s disturbing is the way Geely just crept up on Daimler out of nowhere,” MP Kerstin Andreae, the Greens’ expert on economic policy was quoted by The Financial Times as saying. “One fine day Daimler’s CEO [Dieter Zetsche] woke up to find he had a new principal shareholder, and that’s a huge change in the company’s ownership structure.”
“The fear is that the state is somehow behind this deal, that geopolitical as well as economic interests are tied up in it,” a senior German official was quoted as saying.
Geely chairman Li Shufu didn’t help his case among Germans when he said, speaking on a Chinese television broadcast that the investment was designed to “support the growth of the Chinese auto industry” and “serve our national strategies.”
“You increasingly have the feeling that Germany and China are moving from being partners, to rivals, to adversaries,” says Dirk Schmidt, an expert on Chinese foreign policy at the University of Trier. “The change in mood is astonishing, considering how quickly it’s happened.”
Naturally Taiwan would let such policies revelations be revealed by Japan rather than speaking for themselves. LOL!
A majority of the Taiwanese had seen their family members killed by Japanese troops.
You didn’t get it, did you? Huawei and ZTE both Chinese companies with huge Chinese Goverment influence have been banned in the US because of National Security fears. And US is justified: China’s mission has never been a secret.
Then Broadcom comes along, and wants to buy Qualcomm, a renowned US chip/processor maker and a leading global 5G technology pioneer. While Broadcom is Singaporean, they are deeply involved with Huawei. And the link is simple to understand: Huawei is Chinese, and so is Broadcom (Singaporeans are LARGELY CHINESE). In other words China was trying to acquire a US strategic company through the backdoor. And what would be the intention of the acquisition? To kill/slowdown Qualcomm’s R&D in 5G technology thereby enabling indigenous Chinese companies to dominate the globe.
Fortunately, with Trump manning the gate, China’s sneeky intents will not succeed.
BUYING A RIVAL’S STRATEGIC COMPANY WITH THE INTENTION OF BREAKING/KILLING IT IS NOT ONLY UNHEALTHY COMPETITION, IT’S EVIL!
Wong, why are you always wrong? Don’t knock the United States’ government’s actions; when your government runs everything little thing with an iron fist. Its like a baby rapist calling a prostitute sexually depraved.
Jay Foust, hehe…, you are being unfair to Wong; he is Chinese!
Dont trust china
China greedy
Lol…imagine?when broadcom cut 50% budget allocated for research and development?what will happen to qualcom????????????? ZTE&Huawei will later dominate the market????????????????
Will China allow out side investment in its large assets?
You can’t take over chinese companies.
China is not a tree market economy so as a communist nation should not participate in the free market.
Sum ting wong, Joe.. China has designs to undermine every countries economy, therefore, controlling the world…in some instances , literally stealing sovern territory…like the Spratleys in Asia and claiming islands rich in natural resources..and even going so far as to change their maps showing them as theirs eventho I b arbitration deemed such action illegal leaving the islands still in dispute. ..ask anyone from Hong Kong or Tiawan about sovernty and the Chinese threat of annexation
what if the reverse is happening, like china will try to undermine control over the us chipmaker and in your words "install/plant backdoor program to spy" not just on public but governments as well. does the U.S. government dont have the right to interfere?
Desperate moves by the US government. It just shows that Chinese companies have more money and are better run or managed for they are the buyer. I just hope that what the US government does for US companies will make them more efficient and better run and not run them to the ground because they didn’t have capital infussion when they need it most. Perhaps, the US government will start subsidizing or lending these companies capital just like what China did. But wait, does the US government have enough funds to finance and prop up companies?
Junjun Condor US Govt have been spying & interfering with many countries affairs, killing millions of civillians in the process. US still meddling with Chinese affairs i.e. Taiwan issue. There are countless of atrocities be it covert or carpet bombing down to wedding bombing while the UN can’t do anything about it. Having a strong China will make the US to think twice before bullying others. At least the Chinese are not killing civillians around the world in droves.
I won’t trust the US 100 times over.
Rajendra Bisessar well said
Effendi Al-Banjari Al-Kantani i wont trust china FOREVER
Do you think china is free market economy? What an idiot you are
This is how the Europeans colonised the entire world! It comes back!!!
Westerners " created " free market , globalization , capitalism etc . Now , you feared the very things you have created , with protectionism . The most powerful and richest country in the world … becoming paranoid of a 3rd world country like the PRC …
Are you blind to the totalitarianism called China. ? Everything you said applies to your communist government.
Do you even know what is the definition of free market?
Effendi Al-Banjari Al-Kantani. Not yet ( killing ) , they will start with the Chinese Muslims. ?
Ronald Dawson, the key word is "around the world". Of course, knowing Americans…they will surely misinterpreted things even in plain sight. Don’t forget that your govt eradicated the native Americans populations to the point that they are nearly extinct. I guess killing is just in your DNA.