Trump Blocks Broadcom’s Bid for Qualcomm

This was just the fifth time since that a US president stopped a foreign take over an American firm on national security grounds. Trump issued the executive order after a recommendation from the Committee on Foreign Investment in the US Joining me from our Bloomberg San Francisco Studios is Matt Lawson,

Bloomberg Intelligence litigation analyst Matt. In his executive order, Trump said, there's credible evidence that leads me to believe that Broadcom, by acquiring called Welcome, might take action that threatens to impair the national security of the United States. What is that evidence? You know. The one of the problems with with these investigations, the CIFIUS Investigations Committee Foreign Investment in the U S is there's not a whole lot of

transparency as to what they're looking at. Specifically, it's largely it looks to be largely directed to the development of five G and next generation wireless communication devices. UM. There's a lot of concern about who is leading the way and developing this these technologies, what it could mean for UM, for data privacy, for security, for espionage, etcetera. And so I think that there's there's large concern that consolidation among either businesses that do of a lot of work in

China or Chinese own businesses. Not that Broadcom is a Chinese own business, but there's a concern that UM that movements of those technologies abroad would compromise US interests. So this does come in the wake of Trump's announced of tariffs on steel and aluminum. But are you saying that blocking the Broadcom takeover has less to do with his general protectionist stance and is more focused on technology or on China. I would say it's a little bit of both.

I mean, there's certainly a protectionist flavor to it. You know, Qualcom is you know US company. They have a very strong foothold in the development of five G and next generation technologies. They are UM the leader in developing the chip sets that will drive next generation devices, and so given the Trump administration's focus on developing infrastructure and leading the way in five G in the US, it makes sense to to keep those businesses isolated from from foreign interests.

So it has a little bit to do with the tech and it also has a little bit to do with the with the overall economic goals of the administration to be a little bit more protectionist and a little bit more US focused. This move by a president to stop a hostile bid for a company was unprecedented in that Ciffius intervened in the middle of a proxy fight rather than waiting for a formal purchase agreement. Are there any concerns that could set a precedent for future deals? Yeah,

I think that's That's largely everyone's concern right now. Is you know, the president jumped the gun a little bit. I think is is kind of how people are viewing this. Typically, CIFIUS will review, they'll issue UM a ruling or suggested remedial order. Sometimes companies can can siphon off business segments

to UH to address any national security concerns. But here you kind of had the president hop in and just put an end to the deal before a complete Siffius, before the the CIFIUS process could run its run its course.

And so as you're looking at future M and A activity, future joint ventures, etcetera, I think, you know, tech companies are going to be scratching their heads a little bit and and being overly cautious before they enter into these kind of deals for fear that the president or or SIPHIUS may take a more aggressive stance on blocking the deals. At least a half dozen tech deals have collapsed during the Trump administration in the face of concerns raised by CIPHIUS.

So do you expect that any deal that could give China and edge in critical technology will be blocked in the name of national security? You know, certainly as we're looking at developments in five G, there's been a lot of skepticism looking at you know, Chinese handset makers and ship makers and network infrastructure companies like Huawei Zte have been explicitly called out by by lawmakers, UM and government officials. So it's it's going to be a touchy subject moving forward, UM.

You know, especially if there's a lot of development in next generation wireless, both in UH in a pack and and in the US kind of moving in parallel. Will be interesting to see how policymakers decide to to approach this moving forward. And is there a move by policymakers to actually expand the reach of Scythius There is, there's there's discussion about expanding UM the scope and a little

bit of the authority of Scifius moving forward. UM. You know, Cifius already has pretty broad jurisdiction UM when it comes to looking at foreign investments and potential control over US interests UM. And so lawmakers are you know, have considered expanding that, especially as there are growing concerns over different types of data security technology, access to information kind of who can UM influence the tech on on both sides,

both the developments and then also the utilization. So lawmakers are certainly looking at expanding their their grip on controlling those types of technologies and investments moving forward. So, Matt, what's next for Qualcom? Yeah, So with the with the broad Calm drama out of the way, UM qual calms shareholders, I think we'll start focusing back on the licensing business. Qual Com has been in a global licensing dispute with

Apple over appropriate royalty rates. About a third of Qualcom's revenue and two thirds of its profitability prior to this dispute came from patent licensing. Apple says Qualcom is charging rates that are too high on these assets, and as a result, Qualcom is being bled out by about four billion a year in unpaid royalties from Apple and Apples contract manufacturers. So the focus is now on this dispute.

Can Qualcom turn the corner? Can they do a deal with Apple and resolve this widespread litigation um and kind of move the company forward. I think that's what a lot of people are gonna be focusing on for you have a very tough job. You have a very tough job keeping track of technology litigation today because there's so much of it. Just in in about forty five seconds, when could we see progress in the Apple lawsuits? Yeah?

So overall their forty four Apple lawsuits, there maybe a couple more that I'm that I'm missing across eight different countries. We're looking at trials and some initial decisions either at the end of the second quarter and probably in the second half of the year. From We're looking at Germany, China, and there should be a US International Trade Commission trial in June. So those are the next catalyst coming up. Sure to keep you busy and me busy as well.

Thanks so much, Matt, Always a pleasure to have you on. That's Matt Larsenit's Bloomberg Intelligence Litigation Analyst. For more of his analysis, you can go to d I go on the Bloomberg terminal. Polls are open in Pennsylvania's eighteen district as a national political spotlight, Shaun's on a special election

in a district that may not exist soon. The first special House election of the year pits Democrat Connor Lamb against Republican ricks A Cone in a district that President Trump won by twenty points, but the race is too close to call. The special election was triggered by the resignation of Republican Congressman Tim Murphy following allegations he asked a woman to end her pregnancy. Joining me as its fault.

Professor at Columbia Law School and an expert in election law, rich This is a district where the Democrats didn't even field a candidate in the last two congressional elections. If Lamb wins or even comes close, what does that indicate well, it indicates uh, he continuing trend in a number of the special elections we've seen over the last year or so.

Gewargia Democrats, all the Democrats in general have They haven't always won, but they have almost consistently outperformed their prior records and almost all the special elections that have been held, uh in since the middle of last year. This is a district that Republicans have won for I don't know about twenty years. And Trump went down there and over the weekend and really did some heavy campaigning for the candidate. So he really does he really have a lot at

stake here. Well, it would be a big embarrassment to lose this district. As you point out, the district has been in Republican hands for about twenty years. Uh. Last time in the Democrats didn't even put up a nominee. Uh. Trump took the district by twenty points. Romney took it by about the same in twelve UM. It is on average about more Republican than the country as a whole,

So to lose it would be quite embarrassing. Now people are talking about this and other elections as an indicator for the mid terms, but the mid terms are still eight months away and a lot can happen between them. And now do you look at these elections as indicators. It's premature. I mean, um, I mean they tell us

what they tell us. They tell us that as these other elections have shown this that in the recent months there are the Republicans are not as popular as they once were, and the president may be pulling things down again. They've they've won a lot of their special elections, but they've simply won them by an hour of margins than in the past. And of course they say this, they lost the Alabama seat. Now, unless there's last minute reversal by the courts, the eighteenth district will soon cease to

exist in its current form. Explain what's happened there? Sure so, um, there was a lawsuit was brought challenging the Pennsylvania Congressional district plan as heavily gerrymander in favor of the Republicans. Uh. Since the plan was adopted back in the beginning of this decade, Republicans of the state has eighteen districts. Republicans

have consistently won thirteen, leaving the Democrats five. This is a state which is pretty much a swing state and when Democratics for president the less several elections until the most recently until sixteen when Trump took it. It currently has a Democratic governor. It has one Democratic senator. Pennsylvania is a classic swing state, but it's congressional delegation has been heavily weighted Republican, largely due to the nature of

the map and so the Pennsylvania courts. The Pennsylvania this was litigated in the Pennsylvania state courts under their their state constitutions guarantees of free speech and equal protection. That court concluded that this district was impermissively unconstitutionally gerrymandered and ordered a new plan to be developed. The legislature didn't

do that. They pointed a special master. He came up with a plan which they reproved, which would, as you say, it's basically eliminate this district in its current form, in effect dividing it amongst so splitting it uh in two different ways. The district which is kind of a hybrid suburban and rural district, and the suburban part would become more more suburban, the rural part become more rural. Now, is there any likelihood that that Pennsylvania Supreme Court decision

would be reversed. It's possible. Republicans have been challenging the Pennsylanian Supreme Court is of course the highest court in the state, so no state court can reverse it. Reublicans have tried to get the U. S. Supreme Court to take on the case. So far the court has declined. The Court declined to enter it by issuing a temporary restraining order blocking the thus the Pennsylvania Court to add decision. Uh, there's now another appeal pending. It would be unusual to

step in, but you know it's not out of the question. Um. The new map that you've been talking about will slit, as you said, most of the current eighteenth district into the four and the seventeenth district. If Scone wins, he said he would seek re election in the fourteenth district. Is that a good choice for him? That I believe is the more rural one as the rural part of the districts. I understand that the district has a is about in a suburban area and about in a rural area.

And I think, um, and this is how Republicans because it's kind of uh, sort of deluded the suburban vote, which is pretty evenly balanced between Republicans and Democrats, by combining with a much more Republican area. So most yes, he would most likely one in the rural district, uh, leaving um and and in effect r probably become better for him. Uh if if he, if he wins and then become and runs in the new fourteen, we should say that the winner will still have to run again

in November. That's right, right? Whoever will take office? I guess Wednesday. Maybe he says, how quickly they concertify the results, Maybe it's like a little longer than that will only serve until the end of this year. They will the regularly scheduled election in November will be held in this person will only serve until the end of the year, So Lamb. Though he hasn't said anything, some election experts say he's likely to run in the sevente district, where

there is an incumbent Republicans. Will that be a tough battle for him, probably, but that district will become more democratic entities now and he will be able to take with him part of the current district. So in other words, that that all the districts will have the same names but different contents. So the seventeenth district that will that will be whether be an election in November, will not

be today's seventeenth district. And there is a belief that once UH, if the districts go forward as under the new plan, that district will be a lot more democt, a lot more balance than maybe more pro democratic than it is now. Rich Just UH, briefly, what cases are involving voting are we waiting for Supreme Court decisions in Well, basically there are two cases that the Supreme Court has taken.

One of the Wisconsin case, the Guild case, which was a challenge to the entire map of the state legislative map in Wisconsin and brings the most comprehensive UH proposal for the Supreme Court to get into the reviewing of partisan gerrymandering. There's also a challenge to a specific district in Maryland. So the district in Wisconsin was a Republican gerrymanager, the one in Maryland was a democratic one in which a previously Republican congressional district was reconfigured to allow Democrats

to win. That that case has a different theory targeting just a specific district Uh, and focuses on the district lines and on the stated intent. And then there is the possibility that they might take on this reviewing the Pennsylvania decision with going to the Pennsylvania a congressional plan, which would make things even more complicated. Uh, if they had to, if they took it on, how could they really take it on and uh make it make it

work before they could do it now? In other words, the most likely they would is that they would block the court decision, let the district continue on its current lines, and probably hear it next Hall. It's hard to imagine that they could actually have a full blown hearing on at this point. So again, you never know. We we'll talk again soon. Thank you, rich that's Richard for Fault, Professor, Columbia Law School. Thanks for listening to the Bloomberg Law Podcast.

You can subscribe and listen to the show on Apple Podcasts, SoundCloud, and on Bloomberg dot com slash podcast. I'm June Brosso. This is Bloomberg yea