Feds Want Full Investigation Into Broadcom's Qualcomm Bid
A US Treasury Department-led committee has made Broadcom's proposed $117 billion acquisition of Qualcomm even more unlikely, calling for a full investigation into the unsolicited bid this week.
The Committee on Foreign Investment in the US (CFIUS) said in a letter, cited by the New York Times, that it believes that Broadcom's bid "could pose a risk to the national security of the United States." This is because CFIUS says that the acquisition by Singapore-based Broadcom Corp. (Nasdaq: BRCM) could weaken Qualcomm Inc. (Nasdaq: QCOM)'s ability to maintain its "leading position" in setting the 5G standard and "leave an opening" for China to influence 5G, which could threaten the integrity of US communications infrastructure, CFIUS argues.
CFIUS plans to further assess the proposed acquisition to evaluate the potential security threat. It initially told Qualcomm to delay its Tuesday March 6 shareholders meeting by 30 days for this process. (See Qualcomm Postpones Crucial Meeting on CFIUS Review.)
In the response, Broadcom pledged on Wednesday to maintain Qualcomm's R&D spending on 5G, and to create a new $1.5 billion fund to train and educate the next generation of engineers in the US.
"Broadcom is in every important respect an American company, with a lineage of great American technology icons like Hewlett-Packard, AT&T, Broadcom Corp., and Brocade Communications Systems, Inc," the company said in a statement. "We are now in the final stages of redomiciling to the United States, and that process will be complete no later than May 6, 2018."
— Dan Jones, Mobile Editor, Light Reading