Broadcom said it was reviewing the presidential order."Broadcom strongly disagrees that its proposed acquisition of Qualcomm raises any national security concerns", it said in a statement in response to the decision.
This isn't the first time that President Trump has used his power to block foreign investment into a US company.
Broadcom downplayed chances that the CFIUS investigation (which began last week) might disrupt a potential deal. While Qualcomm is an American company, Broadcom Limited is incorporated in Singapore, causing the deal to potentially be a national security problem.
That conclusion may seem extreme given that Broadcom is based in Singapore - and looking to redomicile to the US, where it conducts most of its operations - but it's not a fear of the Southeast Asian city state that is raising national security concerns.
Broadcom, based in Singapore, is in the process of moving its base of operations to the US.
It is likely however that they would have to take it to court before the order could be overruled, as the order suggests the two companies "permanently abandon the proposed takeover".
"But none of the efforts seemed to be enough to placate CFIUS, which made an unprecedented intervention to halt Broadcom's takeover last week by ordering Qualcomm to postpone its shareholder meeting, at which Broadcom was expected to win a majority of the San Diego company's board of director seats".
An investigation of the deal by the CFIUS had confirmed national security threats related to the Qualcomm acquisition by Broadcom, Treasury said in the letter. Furthermore the candidates that Broadcom was running for Qualcomm's board of directors are barred from participating in that election, and Qualcomm can not accept their nominations.
The sector is in a race to develop chips for the latest 5G wireless technology, and Qualcomm was considered by Broadcom a significant asset in its bid to gain market share. Intel has reportedly been watching the Broadcom-Qualcomm situation with interest, for example. "China has a finely honed capability to access the technology of companies such as Broadcom, along with that of their subsidiaries and acquisitions", he said.
Canyon Bridge Capital - Lattice: Canyon Bridge Capital, a private equity firm, wanted to acquire Lattice, a chipmaker based in Portland, Oregon.
Under the order, both Broadcom and Qualcomm must report to CFIUS every week indicating their compliance with the order, that including descriptions of their work in completely and permanent terminating the takeover plans.
GO Scale - Philips: In 2015, the Dutch electronics giant Philips had an agreement to sell a controlling stake in its automotive and LED business for as much as US$2.9 billion to GO Scale, an investment fund sponsored by GSR Ventures of China and Oak Investment Partners.
Qualcomm shares were down 4.5% in after-hours trading to $59.98, while Broadcom shares were relatively flat at $265.