Singapore's companies on notice that they could pose a national security risk to America.
US President Donald Trump blocked Singaporean microchip maker Broadcom Ltd’s proposed takeover of Qualcomm Inc, and said in a presidential order that there is “credible evidence” the deal threatens national security.
According to the order, all 15 individuals listed as potential candidates on the Form of Blue Proxy Card filed by Broadcom and Broadcom Corporation with the Securities and Exchange Commission on 20 February 2018 are disqualified from standing for election as directors of Qualcomm. “Qualcomm is prohibited from accepting the nomination of or votes for any of the Candidates,” Trump said.
Trump added that Broadcom “shall uphold its proxy commitments to those Qualcomm stockholders who have returned their final proxies to the Purchaser, to the extent consistent with this order.”
This move ends what would have been the technology industry’s biggest deal ever amidst concerns that it would give China the upper hand in mobile communications. Reuters reported that Qualcomm has emerged as one of the biggest competitors to China’s Huawei Technologies Co in the sector, making Qualcomm a prized asset.
The US$117b deal was previously probed by the US Committee on Foreign Investment in the United States (CFIUS). In a letter dated 5 March 2018, the CFIUS declared that the deal “could pose a risk to the national security of the United States.”
CFIUS investigated whether “the likelihood that acquisition of Qualcomm by Broadcom could result in changes that affect the security and integrity of supply of goods and services to the US government in a manner that is detrimental to US national security.”
Qualcomm is a supplier to the Department of Defense (DOD) and performs on a range of contracts for the US government customers with national security responsibilities. It also holds active sole source classified prime contracts with DOD.
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