undergroundnewsroom.com March 23, 2018

Qualcomm takeover a national security risk, says US

08 March 2018, 01:35 | Damon Campbell

Qualcomm takeover bid halted by US government

Qualcomm shareholder meeting pushed forward by a month

Broadcom also claimed that Qualcomm did not disclose the request to Broadcom.

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

Broadcom's proposed takeover warranted a full investigation by the Committee on Foreign Investment in the US (CFIUS), an inter-agency body made up of representatives from the Departments of Defence, State, Justice, Treasury, Commerce, Energy and Homeland Security, Mir wrote.

Broadcom's hostile takeover attempt of Qualcomm could pose a national security risk because of Qualcomm's leadership in developing critical semiconductor technology, according to the U.S. treasury department, setting up a potentially insurmountable hurdle to getting a deal done.

Over the weekend, the government asked Qualcomm, which is based in San Diego, to delay its annual shareholder meeting by 30 days as it conducts its review.

The firm said it expects 5G to take off faster than 4G, hitting 2.6 billion connections by 2025, more than 20 percent of all mobile subscriptions.

Broadcom has pledged to move its headquarters from Singapore to the US, possibly as soon as May.

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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. The company said in a statement that it is cooperating with CFIUS and is committed to making the combined company a global leader in 5G and other technologies.

Reuters reported last week that CFIUS had begun looking at Broadcom's bid amid growing pressure from lawmakers, including President Donald Trump's fellow Republicans in Congress. That would have opened the door further to Broadcom taking over Qualcomm. If Qualcomm weren't the company setting the standard for wireless innovation going forward, it could impact national security, the letter goes on to say. But the day before, Qualcomm said the vote had to be put on hold; a government committee led by the US Treasury Secretary needed time to investigate a potential merger.

Broadcom has struggled to complete its proposed deal to buy Qualcomm as the latter has resisted, citing concerns including the price offered and potential antitrust hurdles.

Ultimately, the CFIUS will look at the deal from a national security standpoint.

The panel also advised against a deal between Chinese-backed private equity firm Canyon Bridge and US chipmaker Lattice Semiconductor Corp, leading president Trump to block the proposal in September 2017.

CFIUS's ability to intervene in the merger could disappear if Broadcom moves its headquarters to the USA, as it promised to do at a public White House ceremony in November.

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