Why America is so scared of China’s biggest tech company

Huawei founder Ren Zhengfei (right) with Chinese President Xi Jinping.

Huawei founder Ren Zhengfei (right) with Chinese President Xi Jinping.

On March 12, fresh off his Twitter proclamation that “trade wars are good and easy to win,” President Trump issued an executive order blocking the biggest tech merger in history. The plan had been for Broadcom Ltd., a Singaporean chipmaker, to acquire San Diego’s Qualcomm Inc., the leading maker of cellphone modems, for $117 billion. Trump said he canceled the deal for fear that Broadcom “might take action that threatens to impair the national security of the U.S.”

The move deflated even the characteristically fiery Hock Tan, Broadcom’s chief executive officer. Trump had praised Tan at the White House months earlier. Moreover, Broadcom looks in most respects like an American company. Tan is a U.S. citizen and resident, the company’s employees are mostly in California, the deal was underwritten by American private equity firms, and Broadcom had promised to relocate its headquarters back to California as part of the deal. What more could American national security interests want? Almost immediately, however, the conversation shifted from Broadcom to Washington’s real concern: Huawei.