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Trump Blocks Tech Merger to Stimulate 5G Leadership

Chris Rowe

Chris’ note: What do self-driving cars, artificial intelligence, and augmented reality have in common? There’s one piece of bleeding-edge technology that unites them all…

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Regular readers know I’m talking about 5G. It’s one of the biggest trends on Jeff Brown’s radar.

Jeff is our go-to tech expert here at The Daily Cut . And this Thursday, August 22 at 8 p.m. ET, he’s hosting a free 5G investment summit.

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As you’ll see, we’re about to enter what Jeff calls the “Final Phase of the 5G Boom.” If he’s right, folks have a real shot at watching a series of small investments return 500%… 1,000%… and more. If you’re serious about profiting from the 5G boom, you’ll want to reserve your spot right here.

But you don’t have to wait until Thursday to learn more about 5G… and why Jeff believes it will be the most important tech trend over the next decade. Below, he shows why 5G is central to a global battle America must win. And the economic impact will be huge…

The United States and China are locked in a winner-take-all economic struggle.

And no, I’m not talking about the ongoing trade negotiations. It’s something else.

Whoever wins will be the economic powerhouse of the next decade. The stakes are that high.

Let me show you what I mean…

Hostile Takeover

Last year, we almost saw a merger between technology firms Broadcom (NASDAQ: AVGO ) and Qualcomm (NASDAQ: QCOM ). Had it gone through, it would have been the largest tech deal to date.

Broadcom had been pursuing Qualcomm since November 2017. It initially offered an unsolicited bid of $103 billion to acquire controlling interest of Qualcomm.

Qualcomm resisted. So Broadcom took another route.

It initiated a hostile takeover of Qualcomm. That’s when an acquiring company attempts to bypass its target’s board and purchases a controlling interest in the company directly from shareholders. Very often, this means offering to buy shares at a premium.

At $117 billion, the new bid for Qualcomm would have represented the largest technology merger in history.

But then the White House stepped in… President Trump blocked the merger. The president said that “credible evidence” suggested that the takeover would pose a risk to U.S. national security.

The official details are classified. But I believe I know why the White House took this unprecedented step.

At the heart of the president’s decision to block the merger is fifth-generation (5G) wireless technology.

And here’s why that’s important…

The Coming Wave of 5G

When you connect to the internet on your computer, smartphone, or smart TV, a vast physical communications infrastructure makes that connection possible.

And over the years, our wireless networks – and the infrastructure that supports them – have evolved.

It all started in the 1980s with first-generation (1G) networks. Compared to what’s possible today, 1G didn’t allow much. You could only place voice calls – there was no layer for carrying other types of data. And you had to use one of those brick-sized cell phones Gordon Gekko yaps into in the movie Wall Street .

But from then on, a new network generation went live roughly every 10 years. Each provided faster download speeds and more applications. The most recent one, 4G, went live around 2011.

Now we’re shifting to the fifth generation of wireless networks – 5G. And it represents the largest leap in wireless technology to date.


A Leap Forward

The current 4G networks are a disappointment. They’re much slower than what the original developers thought the networks would deliver.

Worst of all, the U.S. is in 62nd place when it comes to download speeds. That’s going by a 2018 OpenSignal report.

But with 5G, it’s a different story. At peak speed, 5G will be almost 1,000 times faster than the average 4G connection we have today.

We’ll be going from an average of 16 megabits per second with current LTE connections… to 10 gigabits per second. (One gigabit is 1,000 megabits.)

Even if we assume average 5G speeds will be 10% of their potential, we’d be looking at 1,000 megabits per second. That’s almost 100 times faster than what we have today.

With that kind of speed, you’ll be able to download a two-hour movie in 10 seconds. Dropped phone calls and slow-loading web pages will be a thing of the past.

Plus, some previously “sci-fi” tech will finally become a reality. Technologies like self-driving cars, virtual reality, and holographic projection will all operate over high-speed 5G connections. The applications are endless.

5G is a game-changer because of all the technological innovation it will bring about. It’ll be responsible for $12 trillion worth of new goods and services by 2035. That’s about 70% of America’s total GDP in 2018.

And here’s why the government considers the completion of 5G a matter of national security…

Matter of National Security

Countries that lead the way in deploying these networks will have a competitive economic advantage over other countries. And the technology companies in these “first-mover” countries will be the first to develop the hardware and software enabling these 5G wireless services.

Right now, our government’s fear is that China will set the 5G precedent.

For context, Chinese company Huawei supplies the infrastructure and support for more than half of the 537 4G networks around the world. Suspicions have abounded for years about the company using its technology to spy on U.S. network traffic. And since 2018, tensions are reaching new highs.

This led to Huawei being banned for a time from the U.S. and several other Western markets over spying concerns.

The U.S. government sees it as an imperative that U.S. wireless networks are built out quickly – with U.S. and European technology – to ensure that the country’s networks are less likely to fall victim to foreign espionage.

That’s why the Trump administration blocked the Broadcom/Qualcomm merger.

While Broadcom recently stated its intention to bring most of its business back to the U.S., the bulk of its business is still based in Singapore. And while Singapore is its own country, it’s heavily controlled by Chinese Singaporeans.

The concern was that Broadcom would force Qualcomm to cut back on its 5G research and development, letting Huawei fill the void and making U.S. wireless networks vulnerable to cyberspying.

This isn’t wild speculation, either.

The Committee on Foreign Investment in the United States is a government agency that oversees foreign investment in American companies. It officially recommended blocking the Broadcom/Qualcomm merger. And it specifically mentioned the threat Huawei posed in the 5G space.

The Trump administration even threatened to take things one step further…

Nationalized Infrastructure

In January 2018, leaked White House documents showed that the U.S. government was considering nationalizing the 5G network build-out.

In other words, it wanted to seize control of wireless networks from AT&T (NYSE: T ), Verizon (NYSE: VZ ), and other service providers… and put them in the hands of the government.

I had a hunch at the time that this was just a warning… a way to light a fire under the U.S. companies involved in the 5G build-out.

The Trump administration was saying, “Get out there and build these 5G networks quickly, or we’ll do it for you.”

And I was right. Trump has since said he opposes nationalizing the U.S. 5G network.

But sending a warning was a very smart move by the administration. And it worked.

Verizon and AT&T are already building out 5G networks in dozens of cities around the country. So are T-Mobile and Sprint, which are in the process of merging.

The hope is for the U.S. to regain leadership in wireless network deployments. This will stimulate even stronger leadership in wireless network technology.

If the U.S. fails, the government fears that America would depend on Chinese 5G technology. That would give China an enormous amount of leverage over the U.S.

And remember, 5G is expected to create more than $12 trillion in wealth. Whoever sets the 5G precedent will be the economic powerhouse for the foreseeable future.

This is a race the United States must win at all costs.

Regards,

Jeff Brown
Editor, Exponential Tech Investor

P.S. The 5G race isn’t over yet… That’s why this Thursday I’m hosting a free 5G investment summit, The Final Phase of the 5G Boom .

Key 5G stocks will soar 10X at least. And on August 22 at 8 p.m. ET, I’ll show you how I spot these winners. I’ll even give you the name of the top 5G company on my watchlist. If you’re serious about investing in the 5G boom, you’ll want to reserve your spot here.

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