Game of Thrones may be out of season, but the complex and multi-dimensional strategic drama at the heart of the acclaimed series can still be witnessed in today’s on-going showdown between Broadcom and Qualcomm. This week, we even had a character “death” of one of the “royals” to boot.

For those who have not been paying attention to this epic match, Singapore-domiciled Broadcom has been running a proxy battle with U.S.-based Qualcomm for the past few months, a process that Qualcomm has put enormous efforts into resisting. The two companies are among the most important producers of semiconductors and mobile chipsets, and their combined market value would be in the hundreds of billions of dollars.

Mega-mergers happen occasionally, and hostile takeovers are also not rare. What makes Qualcomm vs. Broadcom unique though is the incredible amount of chess playing that is taking place not only by the two companies, but other companies and governments as well in a simultaneous strategic game for tech domination. Today, I want to highlight a series of those moves from this week, and what those moves portend going forward.

Intel’s Nuclear Option

Intel is the second largest chipmaker in the world, having recently fallen behind Samsung as Jon Russell noted this January. Intel dominates the chipsets for personal computers, but it has struggled mightily to build an inventory of products targeting smartphones.

That gap has allowed companies like Qualcomm to dominate the market for smartphone chipsets, with recent reports indicating that the company receives 42% of all revenue from the market, with Apple trailing at 20% of the market and MediaTek with 14%. Intel has been barely a blip, which is why it announced just before Mobile World Congress a few weeks ago that it was going to invest heavily in 5G wireless technology going forward.

Today, Qualcomm and Huawei are the technology leaders in the emerging 5G market. While Intel has not executed well in wireless chips in the past, there is a plausible path forward for the company to compete with these two leaders and potentially earn itself a profitable spot at the top of the market.

However, Broadcom’s potential takeover of Qualcomm could vastly complicate such efforts. Broadcom and Qualcomm’s combined market cap could be ahead of Intel’s $244 billion valuation, and if Broadcom were to sell off 5G assets to Huawei (a major point of contention here that is definitely not final), then Intel might have to compete with a deeply-resourced Huawei, a battle it would likely not win.

Intel is gearing up to launch what might be dubbed the nuclear option: a complete buyout of Broadcom. The Wall Street Journal reported on rumors Friday that Intel would take such a move, which would massively dwarf the company’s previous largest acquisition of Altera for $16.7 billion. As the WSJ wrote, “Intel is watching the takeover battle closely and is eager for Broadcom to fail [at acquiring Qualcomm] as the combined company would pose a serious competitive threat, the people said.”

So now we have Intel expending all energy to block Broadcom’s bid for Qualcomm, and also Intel considering a pre-emptive, $109 billion (at minimum!) price for Broadcom to prevent the tie-up if it absolutely had to. That’s some very expensive chess moves right there for all of the companies involved.

Singapore, China, and the United States enter the fight

Okay, so a company starts to get involved in an M&A process to prevent their competitors from merging and transforming into a more formidable opponent. That’s pretty standard fare, but where the multi-dimensionality of this acquisition war starts to really become visible is the extent to which national governments are intervening to control the outcome.

The United States is doing the most here, through a government committee known as CFIUS, or the Committee on Foreign Investment in the United States (for those who missed my primer on CFIUS last week, definitely take a read). CFIUS is designed to protect U.S. national security by regulating foreign acquisitions of American companies, and therefore has taken a keen interest in the Broadcom vs. Qualcomm struggle.

In an extraordinarily rare public letter (the committee’s thinking is almost always secret), CFIUS published its preliminary negative outlook on the hostile takeover. Quoting a key paragraph at length:

“Reduction in Qualcomm’s long-term technological competitiveness and influence in standard setting would significantly impact U.S. national security. This is in large part because a weakening of Qualcomm’s position would leave an opening for China to expand its influence on the 5G standard-setting process. Chinese companies, including Huawei, have increased their engagement in 5G standardization working groups as part of their efforts to build out a 5G technology. For example, Huawei has increased its R&D expenditures and owns about 10 percent of 5G essential patents. While the United States remains dominant in the standards-setting space currently, China would likely compete robustly to fill any void left by Qualcomm as a result of this hostile takeover. Given well-known U.S. national security concerns about Huawei and other Chinese telecommunications companies, a shift to Chinese dominance in 5G would have substantial negative national security consequences for the United States.”

Broadcom has been trying to replace most of Qualcomm’s board of directors, with a shareholder vote scheduled for this past week on March 6th. CFIUS asked that the vote be postponed 30 days in order for it to have more time to comprehensively evaluate the national security implications of the proposed transaction.

Originally, I and other analysts thought that CFIUS was responding to pressure from Congress to act unilaterally on the proposed deal. What we have learned though is that Qualcomm’s board had secretly asked CFIUS to review the transaction on January 29th this year.

In other words, Qualcomm is using America’s regulatory authority as a potential weapon to thwart Broadcom’s bid and protect itself. It’s a brilliant maneuver, and also fairly unprecedented: CFIUS is usually only engaged once both parties to a transaction have finalized a deal and submitted it for review.

China has its own regulatory weapon to fight back though. While dealing with the proxy battle with Broadcom, Qualcomm has also been trying to finalize its acquisition of NXP Semiconductors, which has been going on for a year now. It raised its offer price two weeks ago to $44 billion, an offer that looks like it is increasingly acceptable to NXP shareholders.

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