In a stunning announcement today, the Trump Administration has officially blocked Singapore-based Broadcom’s proposed acquisition of rival U.S.-based Qualcomm. The takeover would have been the largest consolidation in the history of the industry. The proposed deal faced much scrutiny both within and outside of the industry, and with the White House announcement the deal is effectively dead.
The proposed takeover of Qualcomm by the Purchaser is prohibited, and any substantially equivalent merger, acquisition, or takeover, whether effected directly or indirectly, is also prohibited. – White House Statement sent to Axios
The full text of the White House statement can be viewed here. According to Axios, the underlying reason behind the move is because of 5G. Qualcomm is the leader in building 5G technology for U.S. telecommunications industry. The Trump Administration was concerned that Broadcom would put an end to Qualcomm’s 5G efforts, paving the way for Chinese telecommunications giant Huawei to take over as the industry leader.
We will recap the timeline of events leading up to this decision as there have been many developments since the news of the potential acquisition first broke back in November.
- November 4th, 2017: Report: Broadcom Looking To Acquire Qualcomm for More than $100 Billion
- November 6th, 2017: Broadcom Officially Extends Offer to Acquire Qualcomm for $105 Billion
- November 13th, 2017: Qualcomm Rejects Broadcom’s $105 Billion Acquisition Offer
- November 22nd, 2017: Qualcomm Investors Would Like Broadcom to Increase its Acquisition Offer
- December 4th, 2017: Broadcom Takes First Step Toward a Hostile Takeover of Qualcomm
- December 10th: 2017: Report: Microsoft and Google Concerned that a Broadcom Acquisition of Qualcomm Would Stifle Innovation
- December 22nd, 2017: Qualcomm Board Rejects List of Directors Nominated by Broadcom
- March 6th, 2018: U.S. Government is investigating Broadcom’s proposed acquisition of Qualcomm
Our take: blocking Broadcom’s takeover is a win for the industry at large. There were fears that such an acquisition would lead to reduced innovation in the chipset industry. Cost-cutting measures might have been implemented, with implications such as the Code Aurora Forum potentially being shut down.
Innovation in the chipset industry is key for not only smartphones, but for the technology powering the world of tomorrow. From autonomous vehicles to the Internet of Things, the devices of the future are powered by chipsets from companies like Qualcomm. Without competition to drive innovation, these technologies could have been stifled as a result.