President Donald Trump’s presidential order blocking Broadcom Ltd.’s attempted hostile takeover of rival Qualcomm Inc. marks the second time in less than three years that the federal government has intervened to halt a transaction with deep ramifications in Orange County.
The Committee on Foreign Investment in the U.S. opened an investigation after China-based electronics manufacturer Unisplendour Corp. Ltd. signed a deal in December 2015 to invest $3.8 billion in Western Digital Corp., which was based in Irvine but shifted headquarters to Silicon Valley last year.
It was a bit surprising, considering the proposed deal carried several provisions that limited Unisplendour’s insight into company operations and board rights, including restrictions on participating in government contract discussions and other “sensitive matters,” such as intellectual property—a growing concern of U.S. businesses and the federal government regarding China.
The inquiry ultimately scuttled the deal, but negotiations paved the way for a venture between Western Digital and Unisplendour roughly a year later.
The world’s largest disk drive maker, which employs about 1,700 in OC, plans to invest $4.6 billion over the next three years in a joint venture with Toshiba after a bitter legal battle with its longtime manufacturing partner that ensued after losing a $17 billion bidding war for Toshiba’s coveted flash business to a group led by Boston-based Bain Capital and including Fountain Valley-based Kingston Technology Inc.
The Toshiba investment will help fund two production plants in Japan specializing in 3-D flash memory chips, which carry more data capacity than 2-D and other traditional memory chips.
Trump’s decree followed a rare intervention by CFIUS, which halted Broadcom’s $117 billion hostile takeover of San Diego-based Qualcomm, delaying its annual shareholder meeting until April 5.
It ordered a national security review of the deal, citing concerns the U.S. would lose the lead to China in the race for 5G supremacy and in doing so compromise national security—sentiments Trump echoed in his presidential order.
The committee, comprised of a panel of representatives from various federal agencies with purview over acquisitions and mergers involving U.S. businesses, argued that if Broadcom acquired Qualcomm it would invoke big cuts in research and development, providing a pathway for China to improve its global position in 5G development.
Singapore-based Broadcom denied the claims in a March 7 letter to Congress, saying it would maintain Qualcomm’s research and development in 5G and promising to establish a $1.5 billion innovation fund to train and educate future engineers.
The deal was closely followed in OC, where Broadcom has a sizable Irvine operation and grew to a global leader in communication chips. Broadcom co-founder Henry Samueli, who serves as the company’s chief technical officer, was deeply involved in the outcome, tapping local executive, activist and philanthropist Julie Hill among a slate of board members to replace Qualcomm’s directors.
That vote was scheduled for March 5 at the Qualcomm shareholder meeting, and chatter indicated Broadcom’s slate would earn the nod.
Broadcom was acquired in early 2016 for $37 billion by Avago Technologies Inc., which renamed the company and moved its U.S. headquarters to San Jose.
Broadcom still plans to redesignate its headquarters from Singapore to the U.S., and said last week that it will end its pursuit of Qualcomm.
Proud Tech Dad
A hockey dad at the North Dakota operation of Lake Forest-based Toshiba America Business Solutions Inc. has been the subject of water cooler and break room conversations for weeks.
Sales professional Pierre Lamoureux is the father of Olympic gold medalists and twins Jocelyne Lamoureux-Davidson and Monique Lamoureux-Morando.
Monique on a breakaway scored the game’s tying goal against Canada just under the seven-minute mark left in regulation, and Jocelyne dazzled the raucous crowd at the Gangneung Hockey Centre in PyeongChang, South Korea, with a nifty triple crossover in the shootout that gave the U.S. women’s team the lead.
Goaltender Maddie Rooney’s puck save on the following attempt sealed the victory, and the U.S.’ first women’s hockey gold medal since the sport was introduced two decades ago at the 1998 Olympic Winter Games in Nagano, Japan.
“It was at that point where all my emotions pretty much just burst out of me. I was so excited for all the girls. So many years had gone into this one moment,” said Lamoureux, who’s been designing, selling and installing audio and closed-caption TV systems for 35 years. “I knew they were the type of players that could be difference makers in a game like this.”
His predecessor company, Offices Systems Inc., was acquired by Toshiba America Business in 2005.
The vast majority of Toshiba America Business Solutions’ $1 billion in annual revenue is generated from its scanners, printers and copiers sold to small and midsize businesses. It has about 165,000 U.S. customers.
