Government Calls Broadcom's Bid for Qualcomm a National Security Risk

  • Government Calls Broadcom's Bid for Qualcomm a National Security Risk

Government Calls Broadcom's Bid for Qualcomm a National Security Risk

Treasury also cited Qualcomm's contracts with USA government agencies with national security responsibilities. This means the US government is going to look into whether Broadcom's acquisition of Qualcomm can threaten the national security of the U.S. On Sunday it asked Qualcomm to delay its shareholder meeting, which was to have been held Tuesday.

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.

A view of the US Treasury building, seen in Washington, DC on June 21, 2017.

Qualcomm said on Monday it was delaying its annual meeting to April 5.

Stockholders who have already voted would be able to change their votes at the meeting, it said. With 11 seats on the Board, Broadcom lobbed in a slate of 6 candidates, hoping that it could win control of Qualcomm and rubber stamp Broadcom's $117 billion bid for the Snapdragon chip designer.

Right now, Qualcomm is the "current leading company in 5G technology development and standard setting", according to the memo. Whether CFIUS has jurisdiction on the company's proposed merger with Qualcomm has even been debated among the committee's members, according to The Wall Street Journal. Qualcomm's opposition to the deal has diminished, but the company claims Broadcom's offer is still too low. President Trump a year ago blocked a Chinese-backed takeover of Lattice Semiconductor Corp. because of the importance of semiconductors to the USA government and China's role in the proposed acquisition.

Saying China and other countries "have been incredibly aggressive and strategic", Cornyn told reporters outside the Senate that a hostile takeover of the chipmaker by a foreign company would be a cause for concern.

The US government is anxious that if Broadcom takes over Qualcomm, leadership will prioritize short-term profits and cutback on research, causing Qualcomm to lose its competitive advantage. The pile-up of deals reflects scrutiny of technology acquisitions going back to the Obama administration, which warned before it left office that China's push to develop its domestic semiconductor technology posed a risk to United States security.

With CFIUS examining the deal, Qualcomm now can work to close its pending $43 billion of NXP Semiconductors to diversify its business beyond smartphones, attempt to make progress on patent licensing disputes with Apple and try to construct a stronger case to shareholders to remain a stand-alone company, said Rasgon. In the end, that approval came just weeks after Broadcom Chief Executive Officer Hock Tan announced in an Oval Office ceremony with Trump that Broadcom would bring its headquarters to the United States.

Broadcom is headquartered in Singapore, but said in November it would move its legal headquarters back to the US.