USA committee might have issues with the Broadcom/Qualcomm deal


The letter also cited Broadcom's unspecified plans for changing Qualcomm's licensing practices that have come under fire from regulators around the world as well as Apple, one of Qualcomm's largest customers.

Broadcom's bid to acquire Qualcomm for $117 billion may be stymied by U.S. security concerns.

In a letter announcing the investigation, Aimen Mir, the Treasury's deputy assistant secretary for investment security, said that any "weakening of Qualcomm's position would leave an opening for China to expand its influence on the 5G standard-setting process".

Qualcomm declined to comment on Broadcom's Wednesday statement.

The US government's Committee on Foreign Investment ordered a national security review of Singapore-based Broadcom and their proposed deal, where it said there is an unnamed "actor" that is working through Broadcom to hurt US national security by acquiring Qualcomm.

The government's move though could now spoil Broadcom's efforts to take over the American company. The company said it recognizes "the important role CFIUS plays in protecting our national security, and is fully committed to cooperating with CFIUS in any review". It seems that Qualcomm contacted U.S. investment authorities to launch an investigation, which incidentally led to Qualcomm's annual shareholders meeting being delayed.

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"It is a blatant act of Qualcomm to maintain the current board of directors", it said. The move is expected to be completed in May. The company has delayed its annual meeting to April 5.

"A shift to Chinese dominance in 5G would have substantial negative national security consequences for the United States", Mir wrote.

It also criticised Qualcomm for not mentioning that it had done this, especially in the two meetings between the companies on 14 February and 23 February, which it said was an "intentional lack of disclosure".

"Qualcomm has become well-known to, and trusted by, the US government", the Treasury Department wrote to lawyers involved in the deal on Monday.

A source said if the deal was completed, the United States military was concerned that within 10 years, "there would essentially be a dominant player in all of these technologies and that is essentially Huawei, and then the American carriers would have no choice". That could be a big disappointment to investors that were hoping to see the takeover happen, but I think it offers an opportunity for Qualcomm to work at righting its ship and becoming the 5G powerhouse the U.S government already believes the company is.

The Treasury Department's concern is both over national security issues and a fear China would be able to gain a strategic advantage in future 5G networks development. Both trade on the Nasdaq.