Published: Thu, March 08, 2018
Worldwide | By Victor Meyer

USA officially flags Broadcom Qualcomm move as national security issue

USA officially flags Broadcom Qualcomm move as national security issue

Singapore-based Broadcom also reiterated that it plans to shift its headquarters to the U.S.no later than May. The committee said this could then lead to lower investment in R&D due to pressure to focus on profitability in the short-term.

Broadcom's proposed takeover of Qualcomm would be the largest deal ever in semiconductors, creating a chip juggernaut with a leading market position in many top chips used in smartphones. There is also concern that the supply of Qualcomm tech goodies to the U.S. state may be affected by the move.

Qualcomm's shareholders will no longer be meeting Tuesday to weigh in on Broadcom's unsolicited takeover bid for the USA chipmaker. "Entrusting this effort to a failing Qualcomm management who lacks the support of its owners, and that pays out much of its excess cash flow in fines as a result of serial lawbreaking, would not be in America's long-term interests".

Today (7 March), Broadcom issued a pledge to keep the USA at the forefront of emerging mobile technology like 5G if it were to acquire Qualcomm in an effort to dispel worries.

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"There can be no question that an American Broadcom-Qualcomm combination will provide far more resources for investments and development", Broadcom said in a statement. 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.

"It is critical that Qualcomm stockholders know that Qualcomm did not once mention submitting a voluntary notice to CFIUS in any of its interactions with Broadcom to date, including in the two meetings on February 14, 2018 and on February 23, 2018". Broadcom has not been specific in its plans for patent licensing other than to say the business model is broken.

On Wednesday, Broadcom tried to assure regulators that it is emphasizing investments in research and development. Harm to Qualcomm's innovation would allow China to expand its influence in key wireless technology, the government said. "Limitation or cessation of supply of Qualcomm products or services to the U.S. government could have a detrimental impact on national security".

Broadcom pledged on Wednesday to keep the United States at the forefront of emerging mobile technology if it were to acquire Qualcomm, the chip maker's latest effort to allay the Trump administration's national security concerns about its hostile takeover bid. Both trade on the Nasdaq.

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