Broadcom pledges 5G commitment to keep Qualcomm offer on track

Citing security Republicans support CFIUS review of Broadcom bid for Qualcomm 0

Citing security Republicans support CFIUS review of Broadcom bid for Qualcomm 0

Instead, Broadcom has resorted to what is essentially a hostile takeover by putting forward a slate of six Broadcom nominees for Qualcomm's 11-member board.

Last month, US semiconductor testing company Xcerra Corp said CFIUS had blocked its $580 million sale to a Chinese state-backed semiconductor investment fund.

The letter published Tuesday said that CFIUS has been "communicating with both parties" for weeks and has so far assessed "information provided in our multiple phone calls, emails and meetings with representatives of both Qualcomm and Broadcom".

Those opposed to Broadcom's $117 billion bid for Qualcomm say it would put the a disadvantage in the 5G race against China, and potentially create national security issues. The review will be conducted by the Committee on Foreign Investment in the United States (CIFUS), a body chaired by the US Treasury that can recommend deals be blocked.

"This measure will afford CFIUS the ability to investigate fully Broadcom's proposed acquisition of Qualcomm", the U.S. Treasury Department, which oversees CFIUS, said in a statement.

The Treasury Department laid out its concerns in a letter to both chipmakers explaining its Sunday order to delay Qualcomm's annual shareholder meeting. Broadcom then attempted to force a vote to install six new members on the 11-person board, who would effectively do Broadcom's bidding, but the US government intervened.

Broadcom, based in Singapore, has pledged to move its headquarters to the US, which it believes would remove CFIUS jurisdiction.

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The government action on March 4 highlighted growing US concerns about safeguarding semiconductor technology and cast a doubt on the deal's success. If the takeover succeeds, Broadcom pledged to maintain the R&D resources Qualcomm devotes to 5G and innovation in future wireless standards and focus the R&D spend on "those critical technologies that are essential to the US". "Articulation of the potential national security concerns, in significant part, is classified".

U.S. Sen. John Cornyn of Texas, as well as San Diego Congressmen Scott Peters, D-San Diego, and Duncan Hunter, R-Alpine, sent letters to Trump Administration officials requesting a CFIUS review. Broadcom is also looking to become a USA company registered in business friendly DE, before the stockholder vote.

At present, Qualcomm, the largest 4G chipset manufacturer in the world, is competing with Chinese companies like Huawei over 5G chipset development.

Bloomberg reported Monday that Broadcom's board candidates were getting substantial support from angry Qualcomm shareholders in early voting.

Broadcom is a Singaporean company and Singapore is a longstanding and strong ally of the United States.

Mr Cornyn said on Monday he was glad CFIUS made a decision to review the deal, noting aggression by " rivals, like China".

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