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Trump administration stalls largest tech merger in new sign of protectionism
[WASHINGTON] A possible merger of two giant makers of computer chips could revolutionise the all-important industry - which touches everything from smartphones to cars - and shift the balance of power from California to Asia.
Washington isn't so sure that is a good idea.
In a rare intervention by the government, the Trump administration moved on Sunday night to stall the potential takeover of Qualcomm, the leading US chipmaker, by Singapore-based Broadcom on national security grounds. The action, by a little-known and secretive government panel, represents a newly aggressive posture by the administration to protect national corporate champions and scrutinise acquisitions by overseas companies.
The panel, the Committee on Foreign Investment in the United States, or CFIUS, typically works behind closed doors and reviews deals only after they are announced. In the case of Qualcomm, the panel, which includes representatives from multiple government agencies, is looking at the acquisition before it is complete. In practice, reviews by CFIUS often lead to the demise of deals.
The heightened scrutiny reflects the growing concern by US President Donald Trump and lawmakers over the flurry of deals in the United States by foreign companies. The worry is that the United States is giving up an edge in areas like technology, as China and other countries gain ground.
CFIUS is intervening as Mr Trump prepares this week to impose hefty tariffs on imports of steel and aluminium.
"This is not the last part of this story," said Derek Scissors, a scholar at the conservative American Enterprise Institute who has called for CFIUS to stall the deal.
"People woke up to realise that if steel is important to national security, then telecoms and semiconductors are also important to national security."
CFIUS is expected to gain more authority. A bipartisan group of lawmakers wants to expand the panel's scope beyond mergers, giving it the power to review joint ventures and investments in startups.
On Sunday, CFIUS instructed Qualcomm to delay by 30 days its annual shareholder meeting, which had been scheduled for Tuesday. Investors were poised to vote at the meeting on the Broadcom bid. The delay will give the panel time to review the transaction.