Published: Sat, March 10, 2018
Economy | By

Broadcom moves to ease USA concerns over 5G investment

Broadcom moves to ease USA concerns over 5G investment

Hock Tan, the CEO of the Singapore-based firm, sent a letter to lawmakers on Friday promising that the acquisition poses no threat to the USA leadership in innovation.

The Committee on Foreign Investment in the United States, which is now looking into whether a merger would harm national security, expressed concerns that a Broadcom takeover of Qualcomm would undermine USA efforts to stay ahead of China in the development of 5G tech.

Broadcom Ltd AVGO.O has promised not to sell critical national security assets to foreign buyers if its deal to buy chipmaker Qualcomm Inc QCOM.O is approved, another effort by the Singapore-based firm to appease US security concerns. "Any notion that a combined Broadcom-Qualcomm would slash funding or cede leadership in 5G is completely unfounded".

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.

Separately, Qualcomm Inc QCOM.O said it discontinued the role of executive chairman and named a new non-executive chairman as it seeks to curry favor with shareholders ahead of a proxy fight with Broadcom now slated for April 5.

The New York Times reported that Broadcom appeared poised to gain seats on Qualcomm's board at this week's meeting, and Broadcom called Qualcomm's filing with CFIUS "a blatant, desperate act by Qualcomm to entrench its incumbent board of directors".

Broadcom did not mention CFIUS in its announcement on Wednesday but said the company intends to "maintain the [research and development] resources Qualcomm devotes to 5G and innovation in future wireless standards". One of it is that it has been providing funds to its R&D with licensing revenue derived from anticompetitive and predatory practices that have put it at odds with antitrust regulators and consumers.

A Qualcomm spokeswoman was not immediately available for comment.

"Qualcomm's work is too important to our national security to let it fall into the hands of a foreign company - and in a hostile takeover no less", said Sen.

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