Broadcom-Qualcomm Merger May Pose National Security Risk

Broadcom-Qualcomm Merger May Pose National Security Risk

Broadcom-Qualcomm Merger May Pose National Security Risk

There's been yet another twist in the ongoing saga of Broadcom's attempt to take over Qualcomm.

"This was a blatant, desperate act by Qualcomm to entrench its incumbent board of directors", the company said in a statement.

Qualcomm just concluded its 5G day in San Diego, California, where it showed off a number of new demos showcasing what the new Snapdragon 845 can do.

The secretive Committee for Foreign Investment in the U.S. (CFIUS) issued the order so it could further investigate the national security implications of a possible takeover. It also contends that the company's plan to buy Qualcomm will no longer fall under CFIUS's review when Broadcom finishes relocating to the US. Qualcomm's board has rejected the offer, and a few days ago it urged shareholders to reelect its members at the annual shareholder meeting that had been scheduled for March 6.

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

An investigation by the CFIUS into a deal that has been proposed, but not yet completed, is highly unusual, and underscores the US' concerns about maintaining its dominance in semiconductors in the face of advances by China.

Wednesday's weather: Sunny spells and a few showers
There is a chance of a light wintry mix early Saturday morning in southern in , and for now, Sunday looks dry also. It'll be a precipitation potpourri the next few days as lake effect snow revs up on the backside of the system.

What's at stake: US-based Qualcomm is a leader in 5G wireless tech for things like driverless cars.

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

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.

'Reduction in Qualcomm's long-term technological competitiveness and influence in standard setting would significantly impact United States national security, ' the letter said. But it now appears willing to continue to pursue its bid for Qualcomm through the CFIUS review, said Bernstein Research Analyst Stacy Rasgon in a research note.

Anyway, CFIUS rarely gets involved before a deal is signed – Broadcom and Qualcomm are still negotiating. CFIUS rules allow a company facing an unsolicited takeover bid to request a CFIUS review, so that its board of directors can better assess the regulatory risk of a deal. The company is now based in Singapore, but said in November that it will move its legal headquarters back to the United States.

Cornyn said on March 5 he was glad CFIUS had chose to review the deal, noting that "some of our global rivals, like China, have been incredibly aggressive and strategic".

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