Qualcomm takeover battle intervention shows U.S. security panel's expanding reach

08 March, 2018, 01:34 | Author: Roderick Gutierrez
  • Reuters

Even so, Qualcomm pushed back on the offer, resulting in Broadcom upping the number to $122 billion in February. There is also concern that the supply of Qualcomm tech goodies to the U.S. state may be affected by the move. Now we have a few more details on the matter, with a U.S. advisement panel deeming Broadcom's proposed takeover plans as a potential risk to national security.

U.S. Republican lawmakers on Monday backed a U.S. panel's decision to delay semiconductor firm Qualcomm Inc (QCOM.O) shareholder meeting to allow for a more extensive review of Broadcom Ltd's (AVGO.O) takeover bid.

Qualcomm on Monday postponed a shareholder vote on Broadcom's nominees for Qualcomm's board after the committee on foreign investment in the U.S., which treasury leads, ordered a delay to review the deal. That's led Broadcom to assure the USA government that it will continue to invest in 5G technologies inside of the country, stating: "Broadcom will not only maintain the R&D resources Qualcomm devotes to 5G and innovation in future wireless standards - we will also focus R&D spend to those critical technologies that are essential to the U.S".

Qualcomm's shareholder meeting is now scheduled for April 5.

Singapore-based Broadcom also reiterated that it plans to shift its headquarters to the U.S.no later than May.

Qualcomm is known for inventing the 2G and 3G wireless network technology that's used by carriers like Verizon and Sprint.

Inevitably Broadcom has whacked out a retaliatory PR entitled "Broadcom Pledges to Make the USA the Global Leader in 5G". Any changes in supply of these products or services could pose national security concerns.

Part of CFIUS' current concern, which is echoed in a letter Cornyn sent to Treasury Secretary Steve Mnuchin last week, could lie in the fact that Broadcom has failed to strike a deal with Qualcomm. It lends weight to Qualcomm's argument that the hostile bid would struggle to get regulatory sign-off. Broadcom is also looking to become a USA company registered in business friendly DE, before the stockholder vote. "Having a well-known and trusted company hold the dominant role that Qualcomm does in the USA telecommunications infrastructure provides significant confidence in the integrity of such infrastructure as it relates to national security".

The panel also advised against a deal between Chinese-backed private equity firm Canyon Bridge and USA chipmaker Lattice Semiconductor Corp, leading president Trump to block the proposal in September 2017. It's not clear how long this full investigation will take but the smart money surely has to be on the whole thing being called off before long. The department pointed to the Chinese company Huawei Technologies as a potential threat; Huawei has a growing 5G patent portfolio and could pave the way for Chinese government control over the sector, it claimed.


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