
Trump Issues Order to Block Broadcom’s Takeover of Qualcomm - coloneltcb
https://www.bloomberg.com/news/articles/2018-03-12/trump-issues-order-to-block-broadcom-s-takeover-of-qualcomm
======
anilshanbhag
If you look at CNBC video on the deal ([https://www.cnbc.com/2018/03/12/us-
tells-broadcom-it-confirm...](https://www.cnbc.com/2018/03/12/us-tells-
broadcom-it-confirmed-security-concerns-in-qualcomm-deal.html)) which talks
about the Government concerns there are two parts:

1) Its a foreign company takeover. This will not hold as Broadcom is
domiciling in the US soon.

2) Broadcom has publicly stated that it intends to do private equity style
management. They are going to add $100B in debt - which might make them cut
R&D. For its size, Qualcomm spends significantly more on R&D and has been a
pioneer of many technologies. CFIUS contends this is a natural security
concern. Any reduction in US R&D spend on key technologies like 5G will lead
to China filling the void.

~~~
greglindahl
CIFUS doesn't exist to force US companies to spend money on R&D.

~~~
anilshanbhag
CIFUS advises the President on deals by foreign companies which are threats to
national security. They strongly feel this deal falls in this bucket.

------
helthanatos
This is good, as it seemed Intel was about to buy broadcom after it bought
Qualcomm. Considering they're all the main competitors for chipsets and such,
this prevents [complete monopolization] of those markets. These companies
remaining under different companies at least lets fail and succeed with their
own style

~~~
nodesocket
From what I've heard the Intel to buy Broadcom rumor was absurd and never
going to happen.

------
antoncohen
But Broadcom is an American company.

Avago was spun out of HP in 1999 (American). They were acquired by KKR and
Silver Lake Partners in 2005 (both American). Listed on the NASDAQ in 2009.
Bought CyOptics in 2013 (American). Bought LSI in 2013 (American). Bought PLX
in 2014 (American). Bought Emulex in 2015 (American). And finally bought
Broadcom in 2015, closing in January 2016 (American). Then they renamed
themselves Broadcom. They moved their legal address from Singapore to Delaware
in 2017. Sure their current CEO (Tan Hock Eng) was born in Malaysia, but he
has been an executive at various American companies for decades.

They are American all the way down.

~~~
c1utch1
Not true. Moving your legal address to the US doesn't make it a US company.
The headquarters is currently in Singapore.

~~~
steviecleveland
Wasn't Broadcom founded by a few UCLA folks in the early 90's?

~~~
oldgradstudent
Broadcom was acquired by Avago, which then changed its name to Broadcom.

------
sqdbps
Will Broadcom still move their HQ to the US?

[https://www.reuters.com/article/us-qualcomm-m-a-
broadcom/sin...](https://www.reuters.com/article/us-qualcomm-m-a-
broadcom/singapore-based-broadcom-to-redomicile-to-us-by-
april-3-idUSKCN1GO15X)

And will Intel buy any of the companies involved?

[https://www.wsj.com/articles/intel-considers-possible-bid-
fo...](https://www.wsj.com/articles/intel-considers-possible-bid-for-
broadcom-)

~~~
adventured
Yes, it's practically guaranteed Broadcom will still relocate to the US. For
at least two reasons.

1) The domicile issue nearly prevented Broadcom from acquiring Brocade
previously. They're going to continue to get blocked, as CFIUS gets more
aggressive. There's zero benefit to remaining in Singapore for Broadcom. Their
corporate income tax rate is barely lower than the US now as well.

2) Broadcom may want to attempt another shot at acquiring Qualcomm later, or
perhaps another large US tech trophy. They won't be able to do that from
Singapore.

------
robbiet480
Rumour about Intel fighting the merger just broke a couple of hours ago...
[https://www.recode.net/2018/3/12/17107910/intel-broadcom-
qua...](https://www.recode.net/2018/3/12/17107910/intel-broadcom-qualcomm-
chipmaker-acquisition-rival-facebook-ar-redditmeredith-museum-failure)

~~~
sqdbps
More like 3 days ago: [https://www.wsj.com/articles/intel-considers-possible-
bid-fo...](https://www.wsj.com/articles/intel-considers-possible-bid-for-
broadcom-)

------
BenSahar
With the dearth of positive news coming out of this administration, I'll take
this win.

That a boy, Trump.

------
mankash666
The better term is "national interest". Qualcomm is a world leading wireless
technology innovator and it's domicile and ownership in the US is in the
national interest.

Manufacturing has already been lost to China, so has solar tech. China also
edges US in areas where regulation is hairy, like genetic hybrids, cloning,
etc. Henceforth, it's important to guard American leadership in technologies
where it leads

~~~
mobilefriendly
Sorry that's a myth, Chinese growth isn't a zero sum game. In fact U.S.
manufacturing has never been stronger:

[https://www.marketwatch.com/story/us-manufacturing-dead-
outp...](https://www.marketwatch.com/story/us-manufacturing-dead-output-has-
doubled-in-three-decades-2016-03-28)

~~~
mankash666
You've proven American manufacturing increased output despite outsourcing. You
didn't prove that outsourcing hasn't cost America leadership in domains, and
jobs.

Until recently, the armed forces weren't able to procure clothing manufactured
in the US, per federal law. That's how dire certain domains have gotten

------
OrganicMSG
Am interested that they also blocked the sale of Lattice, as I just started
teaching myself the icestorm toolchain for coding their fpgas.

------
Analemma_
This is the right decision, but is it normal for M&As to be blocked by
executive order rather than by a DOJ decision, or is this a Trump thing?

~~~
jopsen
> Trump acted on a recommendation by the Committee on Foreign Investment in
> the U.S.

Seems legit.

I know we all love to bash Trump, but he might not be entirely evil. Sometimes
he's not treated fairly, that said it's all well deserved that's for sure :)

~~~
tabtab
Or, his random chaotic approach may _accidentally_ do the right thing
sometimes out of shear probability. A broken clock is right at least twice a
day, a random clock is right randomly.

~~~
Bendingo
No rational person actually believe that POTUS really is 'random' and
'chaotic'.

This type of comment has no purpose except as a cheap shot at a disliked
president. It simply lowers the S/N ratio and brings HN closer to reddit.

Also, correct spelling is 'sheer'.

~~~
Jordrok
Speak for yourself. Trump acts almost entirely on impulse which is close
enough to random.

In fact, he described his own thought processes perfectly in the quote: "I
don't stand by anything." [1]

[1] [https://www.washingtonpost.com/blogs/erik-
wemple/wp/2017/05/...](https://www.washingtonpost.com/blogs/erik-
wemple/wp/2017/05/01/i-dont-stand-by-anything-trump-withers-under-heat-from-
cbs-newss-john-dickerson/?utm_term=.48ff02b9edda)

------
thinkloop
> "There is credible evidence that leads me to believe that Broadcom Ltd." by
> acquiring Qualcomm "might take action that threatens to impair the national
> security of the United States," Trump said in the order released Monday
> evening in Washington.

> The government said it feared Broadcom would cut investment in research and
> development in order to increase short-term profits. That could allow
> Chinese companies to become the dominant supplier, the U.S. said.

The definition of "national security" keeps getting looser over the years.

~~~
maxander
I _suspect_ the issue is that, if whole classes of chips that are important
for military purposes (wireless communications, for example) are made
exclusively by China, they could put in backdoors and other traps that would
compromise U.S. military hardware. I haven't seen anyone discuss this angle
openly, though, so either I'm off base somehow or it's not something the U.S.
wants to loudly discuss (because they're likely doing it too.)

~~~
tooltalk
Nobody is looking at it from that angle because Broadcomm is not a Chinese
company. So, yes, you are way off on this. The Trump admin is essentially
running on exophobia to push all their trade policies (eg, steel tariff where
Canada and Mexico are the top exporters.

~~~
googlryas
Your implication that only Chinese companies can plant backdoors seems
exophobic to me. If we are going to go with the 'only China can backdoor
things', Broadcomm has corporate offices in Singapore - why couldn't someone
amenable to the Chinese cause, or a lot of money, help get a backdoor in? The
same is still possible with US citizens running a US enterprise in the US, but
the punishment in America for treason against America is pretty severe and
well known. What is the punishment in Singapore if you help put a backdoor in
a product which ultimately goes to the US military?

~~~
tooltalk
I guess, to xenophobes, everything looks xenophobic. Sure, there are national
security threats from many other foreign actors, but in this particular case,
the poster to whom I responded wants to specifically discuss hypothetical
threats posed by Chinese interests and companies that are geo-politically
close to China.

------
busterarm
Good. Broadcom is far too happy to release undocumented garbage.

~~~
jdoliner
I sincerely hope that this was Trump's reasoning for the ban. He was so sick
and tired of having to muddle through Broadcom's undocumented garbage that he
just got fed up and decided to spike their acquisition.

~~~
dictum
"FAILING Broadcom keeps churning out illegal garbage. Loser Dems call it
"undocumented silicon" \- complete BS. Sad!"

(I'm wary of redditifying HN but I just had to let this out.)

------
exabrial
Both of the companies need a lot of competition. Nice.

------
Thinpad
I believe Jacobs family at the top were not going to let this M&A happen at
any cost, especially giving control over to Hock Tan. They are very shrewd
business folks (Jews aren't they), unfortunately, the heir to the empire
turned out to be a bit more than play boy resulting in business going south.

------
fiveFeet
This whole episode showed how important Qualcom is for United States national
security. It still looks like a potential acquisition target with a price tag
set by Broadcom. If Intel acquires Broadcom (thus making it an American
company) then it may go after Qualcom. Otherwise, Intel or someone with deep
pockets may also try to acquire Qualcom directly.

------
cylinder
Hah... Trump just gave a warm reception to Broadcom ceo at the oval office
only four months ago, as a reward for moving their HQ from Singapore to the
US! Great to see that commitment rewarded

~~~
chapill
When someone visits your home, they are your guest, and they treat it as a
privilege to be there. If they don't, you kick them out and don't invite them
back.

It was Broadcom CEOs privilege to be a guest in the White House, not the other
way round.

------
mevile
Is there a free market argument in favor of the take over? Seems like almost
nobody wanted this. How did the market go wrong here?

~~~
ananthraghavan
The takeover going through is the logical conclusion of free markets - a
monopoly is very profitable for shareholders. All signs pointed to the market
wanting this deal to go through, there was a Bloomberg article a couple weeks
ago saying that half the votes counted indicated that all of Broadcom's
candidates for the board would win.

------
russellbeattie
Well... I guess even a broken clock is right twice a day.

------
dmode
What nonsense. Now any unilateral measures can be imposed in the name of
“national security”.

~~~
TallGuyShort
If national security doesn't work, interstate commerce has been working pretty
well for both parties whenever it suits them too.

------
sova
It's good news. State-sponsored 5G in the USA would be great, and
unprecedented. Hopefully we can agree on that.

~~~
chapill
It's rather odd watching the same group that wants Net Neutrality and
municipal broadband disagree with you.

Trump's nationalized 5G idea is brilliant in that it consolidates all efforts,
but also serves to protect freedom. Under the privatized approach we use now,
wireless ISPs spy on us, and sell the data to the government. That's
constitutional and legal, because the government didn't do the spying. Under a
nationalized plan, it would be unconstitutional for the government to conduct
dragnet spying.

Do we drive on corporate owned highways? No, and we have the most extensive
highway system in the world. For comparison, look how well privatized rail
worked out. You're right. Privatized infrastructure sucks.

~~~
maxharris
_No, and we have the most extensive highway system in the world._

That extensive highway system has destroyed communities, alienated us from one
another. It destroyed passenger rail (air travel took the high-end of the
market, to be sure, but what business does the government have in using
taxpayer money to destroy an entire industry?)

If you were a person of color in the 1950s, highways likely destroyed the
places you lived in. And you couldn't follow the white people to the suburbs.
Racist people used zoning laws to prevent you, and where would you get the
money to do so anyway? The vast majority of the high-paying professions were
not open to you.

[https://www.theatlantic.com/business/archive/2015/11/syracus...](https://www.theatlantic.com/business/archive/2015/11/syracuse-
slums/416892/)

~~~
protomyth
Highways didn’t destroy passenger rail. Cargo destroyed passenger rail in the
US. Higher profit, much fewer customers, B2B instead of B2C, long term
contracts, and a much lower cost. There is no business advantage to passengers
over cargo.

