In an executive order signed on Monday, Donald Trump blocked Broadcom's (AVGO  ) takeover of Qualcomm Inc. (QCOM  ), stopping a proposed $117 billion deal that would have seen the merging of two computer chip-making giants. Citing national security concerns, Trump's order prevents Broadcom from conducting "any substantially equivalent merger, acquisition, or takeover" of Qualcomm. In the order, announced by the White House on March 12, Trump claims that there is "credible evidence" that should Broadcom's purchase of Qualcomm go through, the Singapore-based company "might take action that threatens to impair the national security of the United States."

Broadcom has since withdrawn its offer to acquire Qualcomm in compliance with the executive order. The company made the announcement on March 14, two days after the order was issued.

Broadcom, a major chip-maker headquartered in Singapore, was set to merge with the San Diego-based Qualcomm in a hostile takeover. At the time of Trump's order, the proposed deal had yet to be. In November, Qualcomm's board had rejected Broadcom's initial proposed bid of $130 billion, a price that would have made the deal the second-largest in corporate history. At the time, Qualcomm's presiding director, Tom Horton, dismissed Broadcom's bid in a statement, saying, "The board has concluded that Broadcom's proposal dramatically undervalues Qualcomm and comes with significant regulatory uncertainty."

Monday's executive order was enacted after the U.S. Treasury Department's Committee on Foreign Investments in the United States (CFIUS) warned that Broadcom's hostile takeover of Qualcomm could "pose a risk to the national security of the United States." In a March 5th letter, the CFIUS expressed its concern that the deal could potentially disrupt Qualcomm's role as an important supplier for the U.S. Department of Defense.

In outlining their reservations with a Broadcom-Qualcomm deal, the CFIUS emphasized that the deal could weaken Qualcomm's "technological leadership," based on the likelihood that Broadcom would move to reduce the company's research and development activities. The committee's fear of any potential reduction in Qualcomm's competitiveness appears most strongly motivated by its awareness of China's growing role in setting standards for 5G technology. In its letter concerning the Broadcom-Qualcomm deal, the CFIUS warns that a hostile takeover of Qualcomm could leave "a void" in 5G technology that would be filled by Chinese firms, specifically pointing to the influence of the Chinese networking and telecommunications company Huawei (SHE: 002502).

The CFIUS under the Trump administration has been particularly concerned about deals connected to Chinese influence on U.S. national security. Last September, Trump issued a similar executive order blocking a deal by Canyon Bridge Capital Partners to buy Lattice Semiconductor Corp. (LSCC  ). That proposed purchase had received backing by the Chinese government.

In an effort to ease the acquisition process, Broadcom had been pursuing a redomiciliation from Singapore to the United States since last November. Though the company is no longer looking to take over Qualcomm, Broadcom will continue to seek to move its headquarters to the United States, according to a statement from the company.