Chipmaker Broadcom, whose components power many cellular and Wi-Fi products, may not be able to buy competitor Qualcomm after all. The hostile takeover was announced back in November and even though the headquarters of the combined company is expected to be in the US, the government has taken moves to block the deal.
According to The New York Times, the Committee on Foreign Investment in the United States has put the brakes on the deal. This committee tends to work secretively, but according to the Times, a review by the committee is much likelier to signal the end of a potential deal.
This same committee has taken a stance several times against any growth by Chinese company Huawei into the US market. When Sprint was up for sale to a foreign company, the committee expressed concerns that Huawei equipment would be used, and recently there have been a spate of security concerns about phones made by the company.
Overall, this is consistent with the more nationalistic stance that the current administration has taken when it comes to investment from overseas companies.
Qualcomm has been asked to delay its shareholder meeting 30 days. The meeting, originally scheduled for Tuesday, would have included a vote to approve or reject a bid from Broadcom.
This whole battle may seem unimportant to all but political junkies but for those of us who use home theater equipment, cellular radios, or computers, it’s extremely important. When you think about it pretty much everyone falls into that category — tell me someone who doesn’t have a TV or cell phone? Qualcomm and Broadcom have been fighting for superiority for decades and their competition has meant everything from better cameras to faster Wi-Fi. Since Broadcom was actually a US-based company until fairly recently, the two firms were both shining examples of American innovation that was exported to every corner of the world. With Broadcom’s transition into a Singapore-based company with ties to China, its potential acquisition of its strongest — and most American — competition should be something to worry about.
We’ll be watching this story carefully and you should as well.