Qualcomm says Broadcom deal opens national security issues

Qualcomm says Broadcom deal opens national security issues

Qualcomm says Broadcom deal opens national security issues

"This is a very serious matter for both Qualcomm and Broadcom", the San Diego company said in a statement.

Broadcom has nominated six alternative candidates to Qualcomm's 11 member board of directors in a hostile takeover bid. "A disruption of Qualcomm's R & D efforts would in effect hand the growing competition for 5G to China".

Wrapping up the move from Singapore and redomiciling in the United States relatively quickly could remove a roadblock to the proposed deal by calming concerns at the inter-agency Committee on Foreign Investment in the United States (CFIUS), which has the power to stop deals that could harm national security.

"We can not overstate the likely harm (from a Broadcom hostile takeover) that would result to Qualcomm, the USA company leading the development of 5G and other next-generation technologies, as well as to the United States security interests", said the Gallagher letter.

Broadcom's proposed purchase of Qualcomm is valued at about $117 billion.

Broadcom on March 5 said the decision was the result of secret moves made by Qualcomm on January 29 to encourage an investigation by CFIUS into the proposed $117 billion buyout.

In what Broadcom calls an "engagement theater", the company claims that Qualcomm did not disclose the request to Broadcom, which was seen as an "intentional lack of disclosure". Qualcomm has so far resisted the unsolicited bid as too low and fraught with regulatory challenges.

Broadcom, which was created through a series of mergers of semiconductor companies, said it is on track to become based in Silicon Valley by the end of its fiscal second quarter ending May 6.

The Committee on Foreign Investment in the United States (Cfius), a branch of the US Treasury which can intervene on national security grounds, ordered the 30-day delay to "afford Cfius the ability to investigate fully Broadcom's proposed acquisition of Qualcomm". Qualcomm has made it clear in the past that it does not want to sell itself to Broadcom, noting that such a deal would be placed under regulatory scrutiny.

Five other members of Congress signed the Gallagher letter on Friday that was sent to Treasury Secretary Steve Mnuchin.

Last week, - a move that might have national security implications for the development of 5G technology in America.

CFIUS was apparently split on whether or not to review Broadcom's takeover attempt.

Reuters had reported last week that the panel, which can stop mergers that could harm USA security, had begun looking at Broadcom's bid, after pressure from politicians including senior Republican Senator John Cornyn.

Latest News