Trump Blocks Broadcom-Qualcomm Merger

President Donald Trump has blocked the merger of chip makers Broadcom and Qualcomm by executive order as a potential security risk, saying that the proposed takeover of Qualcomm by Singapore-based Broadcom Ltd. and its Broadcom Corp. (California) and Broadcom Cayman (Cayman Islands) partners "threatens to impair the national security of the United States."

Related: Broadcom to Wrap U.S. Redomicile by April 3

Invoking his national defense powers under the Defense Production Act of 1950, the President said, "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."

Related: Broadcom Tries to Quell National Security Concerns Amid Play for Qualcomm

The order included preventing more than a dozen proposed new directors of Qualcomm from taking board seats.

Related: Broadcom Moving Back Stateside 

"The Purchaser and Qualcomm shall immediately and permanently abandon the proposed takeover," the order reads. "Immediately upon completion of all steps necessary to terminate the proposed takeover of Qualcomm, the Purchaser and Qualcomm shall certify in writing to the Committee on Foreign Investment in the United States (CFIUS) that such termination has been effected in accordance with this order and that all steps necessary to fully and permanently abandon the proposed takeover of Qualcomm have been completed."

The President said he reserved the right to weigh in again if he doesn't like who is trying to buy Qualcomm.

Related: Broadcom Cuts Offer for Qualcomm to $79 Per Share

Update:Broadcom on Monday said it is reviewing the order and that it "strongly disagrees that its proposed acquisition of Qualcomm raises any national security concerns."

-Jeff Baumgartner contributed to this story

John Eggerton

Contributing editor John Eggerton has been an editor and/or writer on media regulation, legislation and policy for over four decades, including covering the FCC, FTC, Congress, the major media trade associations, and the federal courts. In addition to Multichannel News and Broadcasting + Cable, his work has appeared in Radio World, TV Technology, TV Fax, This Week in Consumer Electronics, Variety and the Encyclopedia Britannica.