“With this action, the Trump administration is signaling that it will act to protect U.S. economic and national security, which are increasingly viewed as one and the same thing when confronting the rise of China as a technology power,” said Paul S. Triolo, the head of global technology for the risk-consulting firm Eurasia Group.
The move followed Mr. Trump’s decision to impose stiff tariffs on steel and aluminum imports after the Commerce Department declared that the imports were a threat to national security because they degraded the American industrial base. Mr. Trump singled out China in announcing the tariffs, saying the nation was flooding the United States with cheap metal, often by routing it through other countries. The legal provision that allowed Mr. Trump to impose the tariffs had been used only twice in history, to limit oil imports from Libya and Iran.
Concern about Chinese investments in technology has been building for years. In 2015, China rolled out a sweeping plan called “Made in China 2025” to upgrade its industry. The focus on China’s industrial policy intensified at the end of the Obama administration, when Commerce Secretary Penny Pritzker called out Chinese state-led interference as a threat to the global chip-making industry.
But the Trump administration has called for an even harder line on China, as more evidence emerges that the country is engaged in a pattern of global acquisitions that would give it an edge in advanced technology and box out the United States government from similar partnerships.
These concerns are what ensnared Broadcom’s hostile bid for Qualcomm. Qualcomm, based in San Diego, is poised to be an industry leader in the next-generation high-speed mobile network technology known as 5G, which will be critical for the development of future industries, including driverless cars and artificial intelligence. Estimates by Qualcomm and the research firm IHS Markit have suggested that 5G would generate $12.3 trillion in economic activity and create 22 million jobs by 2035.
Daniel H. Rosen, a partner at the research firm Rhodium Group, said the attempted takeover hit “right at the core of concerns about how national security concerns are going to evolve tomorrow.”
“I think any foreign acquirer would have given rise to very serious and difficult-to-answer questions in the United States right now,” he said. “In this case, the president is being driven by the arc of history, rather than the other way around.”
But the American impulse to punish China comes with huge risks, particularly for companies like Qualcomm, which derives nearly two-thirds of its revenue from China and has joint ventures with Chinese firms. China could retaliate against American companies and products, former officials and trade experts warned.
Jason Furman, a former top economic adviser to President Barack Obama, warned that Cfius was moving beyond its area of expertise by making broad assertions about national security and that such protectionist behavior could stunt global investment.
“If every country in the world conducted policy like that, it would make cross-border investment difficult to the detriment of American and foreign companies,” Mr. Furman said. “Foreign direct investment is an important part of the strength of the U.S. economy.”
Only one company comes close to matching Qualcomm’s abilities: its Chinese rival, Huawei. United States regulators have blocked multiple attempts by Huawei to acquire American businesses or sell products in America in the past.
Still, the administration’s speedy response to Broadcom’s takeover bid was unprecedented, some Cfius experts say, in part because the government intervened before shareholders of a publicly traded company were allowed to vote.
Derek Scissors, a resident scholar at the American Enterprise Institute, said the move was unusual but also warranted, given that the United States lacks another firm like Qualcomm. Mr. Scissors said the move also ratcheted up the administration’s efforts to link the soundness of the economy with national security.
“I think that’s clearly the direction of U.S. policy at the moment,” he said.
While the Trump administration was predisposed to reject a takeover so closely related to national security, behind-the-scenes machinations by Qualcomm hastened the result.
On Jan. 29, Qualcomm submitted a voluntary filing asking Cfius to review whether Broadcom’s proposed takeover of its board posed national security concerns. On March 5, a Treasury official issued an interim order and sent it to Qualcomm’s counsel and Broadcom’s counsel, saying Cfius had identified national security concerns and would expand its review to look at whether the entire transaction posed a national security risk. The move stunned Qualcomm, according to two people familiar with the matter, since Cfius was exceeding its request and essentially investigating a deal that had yet to be agreed to.
The next day, Broadcom asked the government of Singapore for an emergency hearing there to move its headquarters to the United States, which it expected to reduce the scrutiny of the merger. That move irked Cfius, which said in a letter on Sunday that Broadcom had violated its interim order. On Monday, Mr. Trump killed the takeover attempt.
Anne W. Salladin, a former senior counsel at the Treasury Department who provided legal advice on Cfius matters, noted that Cfius reviewed nearly 240 transactions last year and was on a pace for about 215 this year. The more aggressive approach being taken by the Trump administration could have a chilling effect on global technology mergers.
“It’s very clear that some deals in certain areas will not get through, particularly when they are in sensitive areas,” Ms. Salladin said. “The government is prepared to be very tough when strategic areas are at risk.”
While the move to scuttle the Broadcom deal was a provocative one by Mr. Trump, it was one of the rare presidential decisions that appeared to unite Republicans and Democrats. Senator John Cornyn, the Texas Republican who has proposed legislation to strengthen reviews of such deals, had been calling on Mr. Trump to intervene. And on Tuesday, Senator Chuck Schumer of New York, the Democratic minority leader, praised the decision.
“Let me say unequivocally: President Trump and his administration made the right decision on blocking Broadcom from taking over Qualcomm,” Mr. Schumer said. “We all know that China has been rapacious about trade, and very smart.”
The changes have reverberated across the globe. On Tuesday, Li Dongsheng, the chief executive of TCL, a Chinese consumer electronics maker, accused the Trump administration of bias against Chinese firms.
“I understand that local governments need to protect their local industries, but the way the U.S. government treated Chinese companies was unfair and absurd,” Mr. Li told reporters on the sidelines of the annual meeting of the National People’s Congress, where he is a member, according to Reuters.
In June, TCL abandoned its bid for San Diego-based Inseego, a maker of networking routers and other hardware, after Cfius expressed national security concerns. Inseego’s networking gear is used by financial institutions, and the company is developing networking gear that will be used in high-speed 5G mobile networks.
“There was great concern by the U.S. government that the development process would be taken over and migrate to China and that all the intellectual property here would be taken over,” said Dan Mondor, chief executive of Inseego.
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