Published: Fri, March 09, 2018
Technology | By Christopher Mann

Broadcom appeases US on 5G investment

Broadcom appeases US on 5G investment

The U.S. government's Committee on Foreign Investment in the United States (CFIUS) has ordered a national security review of the proposed deal, saying a takeover can lead to lower R&D spending and weaken Qualcomm's competitive position against Chinese companies. The underlying theme of Broadcom's pitch to Congress is that it will make every effort to ensure the USA leads the way in wireless technologies, today and in the future. We have a proven track record of investing in and growing core franchises in the companies we acquire. Presidents can disagree, but tend to side with CFIUS, as Trump did by blocking a planned Chinese acquisition of Lattice Semiconductor a year ago.

"The bottom line is that a combined, American Broadcom-Qualcomm will be a more focused and stronger champion for sustained United States leadership in 5G than a standalone Qualcomm, an outcome that strongly supports America's national security interests", Broadcom stated in its letter. As part of the that, Broadcom also pledged to work with the USA government to achieve its 5G goals, as well as future ones.

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"Broadcom will not sell any critical national security assets to any foreign companies", the letter said. It initially told Qualcomm to delay its Tuesday March 6 shareholders meeting by 30 days for this process. Broadcom was expected to win a majority of seats on Qualcomm's board of directors at the meeting.

Broadcom has promised not to sell critical national security assets to foreign buyers if its deal to buy chipmaker Qualcomm is approved, another effort by the Singapore-based firm to appease United States security concerns. If CFIUS thinks there's a problem, it can advise President Trump to block the deal. It also noted that Qualcomm is facing scrutiny from regulators around the world about what some say are anticompetitive licensing agreements that the company uses to fund its R&D investments. Qualcomm's argument of its anticompetitive licensing practices needing to fund a robust R&D effort has no truth.

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Qualcomm could not immediately be reached for comment.

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