March 14 news, according to CNBC website reports, US time on Tuesday, by the Broadcom acquisition of Qualcomm by the United States President Trump halted, the US stocks fell across the entire technology sector.
In regular trading on Tuesday, the S & P 500 index technology sector fell more than 1%, which is the largest decline in the sector since March 1 this year.
Analysts believe that U.S. President Donald Trump banned Broadcom's merger with Qualcomm on Monday, resulting in the decline.
They said that it was not the failure of the Broadcom and Qualcomm transactions that resulted in the decline of the US stocks technology sector, but the impact of Trump's tough measures. Earlier, on some trading days, despite the general decline in U.S. technology stocks, Qualcomm’s share price has risen against the market.
Worries about trade protectionism
Art Hogan, chief market strategist at investment company BRileyFBR, said in an interview with CNBC that Trump’s involvement in the acquisition battle between Broadcom and Qualcomm for months may signal that the U.S. government will implement more Strict review.
Hogan said: "In the past 24 to 48 hours, what really made people feel that something changed was the tone of the US government. Broadcom and Qualcomm's deal seemed to be a long-term dramatic event. Surprisingly, the U.S. government Attitude."
He pointed out that this will eliminate the “halo effect†brought by the transaction to the technology industry and give investors doubts about the prospects for future M&A transactions.
At the same time, the merger between Qualcomm and NXP Semiconductors, AT&T and TimeWarner, Disney, and 21st Century Fox may face regulatory challenges.
Hogan said: "In the technology industry, a considerable part of its valuation is brought about by mergers and acquisitions."
Impact on the semiconductor industry
In the past 12 months, the S&P 500 semi-conductor sub-sector led by chip giants Intel, Nvidia and Texas Instruments has increased by nearly 45% year-on-year, and has been leading the growth of the technology sector.
Scott Kessler, chief technology analyst at market research firm CFRA Research, said that the failure of Qualcomm and Broadcom mergers has hit the semiconductor sub-sector in particular.
Kessler said in an interview with CNBC: “The whole incident has caused people to breathe cold air, because at least it seems that the US government’s protectionism has become more and more intense, and it is currently manifested in increasing tariffs and sabotaging M&A deals. Broadly speaking, these measures may not be a good thing for the US semiconductor industry and the entire technology industry."
He pointed out that the semiconductor sub-sectors index, which has always led the technology sector, continues to decline, which may scare off investors in the technology industry.
On Tuesday, the U.S. semiconductor sub-sector fell by more than 1%, falling by more than 3% compared to its highest level in the last 52 weeks.
Kessler said: "This is a considerable fluctuation."
Trouble with China
The failure of Qualcomm’s and Broadcom’s transactions has led some investors to worry that the Trump administration will take tough words on China.
Trump prevented Broadcom and Qualcomm from trading on the grounds of national security. But in the final analysis, he was worried that Chinese companies would enter the US telecom market and beat the United States in the race to develop a 5G mobile wireless network.
Although Broadcom, headquartered in Singapore, is currently preparing to move its corporate headquarters to the United States. The U.S. Department of the Treasury has stated that “Chinese companies may start fierce competition to fill any gaps in Qualcomm’s hostile takeovers.â€
Analysts said that the blocking of Broadcom’s trading with Qualcomm may mean that Chinese companies entering the US market will face greater obstacles set by the US government.
Last week, Trump raised the import tariffs on steel and aluminum and exacerbated concerns about the outbreak of trade war between the United States and China.
Dan Ives, an analyst at GBHInsights, a market research firm, said: “People are worried that the Trump administration’s blockade of Broadcom will fuel the US-China trade war that may occur in the next 12 to 18 months. ."
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