Steven Mnuchin, the Treasury Secretary, said in a statement that the decision was part of the administration’s “commitment to take all actions necessary to protect the national security of the United States.”
He said the order was based “on the facts and national security sensitivities related to this particular transaction only and is not intended to make any other statement about Broadcom or its employees, including its thousands of hard working and highly skilled U.S. employees.”
Yet the order will undoubtedly raise questions about the extent to which the Trump administration is willing to intervene in private-sector decisions. While Qualcomm was opposed to the merger, the proposal was headed to the company’s shareholders for a vote on whether the offer was in the firm’s best interest. The foreign investment committee intervened before that could happen, refusing to let the shareholder meeting take place until after it had a chance to investigate.
The president said his decision had been based on the review by the committee, which focused on how Broadcom’s purchase of Qualcomm might affect next-generation high-speed mobile networks known as 5G.
The panel said that the leadership of Qualcomm, which makes wireless chips and also licenses key wireless patents, was too important to put into hands of a company with links to China. The committee argued that economic leadership in 5G was also a national security interest.
Under Mr. Trump, several deals involving foreign buyers have been squelched after a review by the committee, including Moneygram’s sale to an affiliate of the Alibaba Group and Lattice Semiconductor’s sale to an investment firm with reported ties to the Chinese government. But the action against Broadcom was unusual because mergers are rarely killed before a publicly traded company’s shareholders are given the chance to decide for themselves.
“China would likely compete robustly to fill any void left by Qualcomm as a result of this hostile takeover,” a United States Treasury official wrote in a letter last week to the companies.
A presidential action against foreign investment in an American company is rare and has only taken place four times in the past 30 years, according to the law firm Ropes & Gray.
Broadcom and Qualcomm did not immediately respond to requests for comment.