SINGAPORE (Mar 16): When Tan Hock Eng, CEO of Broadcom, announced last November his company was redomiciling to the US, President Donald Trump praised him as “a great, great executive” and called Broadcom “one of the really great, great companies”.
Within hours of the White House meeting, Tan launched the largest takeover deal in tech’s history, a US$117 billion ($153 billion) cash-and-share bid for rival Qualcomm, known for its baseband 4G chips used in smartphones.
Though his White House appearance was derided as a move to curry favour with Trump, the bet was that the Broadcom-Qualcomm was a done deal, particularly after Tan sweetened the offer in January with a higher stocks component, boosting the total price tag by US$16 billion.
But in a shocking executive order, Trump last week scuttled Broadcom’s hostile bid. The White House said it had “credible evidence” to believe that if Broadcom were to acquire control of Qualcomm, it “might take action that threatens to impair the national security of the United States”.
Investors were left puzzled with Trump’s move to block Broadcom, wondering what it all really meant for the communications chip giant, tech M&As and other cross-border deals.
The White House also proposed US$60 billion in additional tariffs on Chinese tech goods, hurting Chinese tech and telecom-related exports, driving up the cost of gadgets such as smartphones and ultimately impacting the entire global tech sector.
Can US chip giants recover from the setback? Can anything stop China from becoming the global leader in chips now?
Find out more in this week’s issue of The Edge Singapore (Issue 822, week of Mar 19), on sale now at newsstands.
