Published: Wed, March 07, 2018
Tech | By Tabitha Holland

USA could block Broadcom's Qualcomm deal over national security fears

USA could block Broadcom's Qualcomm deal over national security fears

Broadcom has sought to acquire Qualcomm since November in what would be the largest tech merger in history at $117 billion, but the USA company rejected each offer.

"This measure will afford CFIUS the ability to investigate fully Broadcom's proposed acquisition of Qualcomm", the U.S. Treasury Department, which oversees CFIUS, said in a statement.

The US government's Committee on Foreign Investment in the United States (CFIUS) ordered a national security review of Broadcom's proposed deal on Sunday in an unusual move that prompted Qualcomm to delay a shareholder meeting yesterday.

Broadcom is now based in Singapore, but is in the process of moving its headquarters to the U.S. Broadcom has its Americas headquarters in San Jose, Calif. Qualcomm is headquartered in San Diego.

It said: "Broadcom's only correspondence with CFIUS was in response to CFIUS inquiries about Broadcom's nomination of directors to the Qualcomm board of directors, and such requests did not reveal that Qualcomm filed to initiate the CFIUS review on 29 January 2018". "Articulation of the potential national security concerns, in significant part, is classified".

"While the United States remains dominant in the standards-setting space now, China would likely compete robustly to fill any void left by Qualcomm as a result of this hostile takeover", the letter reads. Harm to Qualcomm's innovation would allow China to expand its influence in key wireless technology, the government said.

Huawei has been forging closer commercial ties with big telecom operators across Europe and Asia, putting the company in prime position to lead the global race for 5G networks despite USA concerns.

Treasury also cited the Defense Department's reliance on products made by Qualcomm, which is based in San Diego. Tom Cotton of Arkansas.

Broadcom still is moving ahead, and the company believes it can work things out with the CFIUS in time for Qualcomm stockholders to vote for a new Board run by Broadcom. Broadcom is based in Singapore. It's unclear whether the company will attempt to install the friendly board members at Qualcomm's next meeting scheduled April 5.

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