US Calls Broadcom's Bid For Qualcomm a National Security Risk

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The Singapore-based chip business accused Qualcomm of tipping the wink to the US Committee on Foreign Investment in the United States (CFIUS) to take a closer look at Broadcom's proposed acquisition.

US regulators are looking closely at Broadcom's offer for Qualcomm.

"Having a well-known and trusted company hold the dominant role that Qualcomm does in the USA telecommunications infrastructure provides significant confidence in the integrity of such infrastructure as it relates to national security".

Broadcom, which has put forward a selection of candidates for the board of directors which it hoped to have elected at the meeting, responded to the announcement by once again accusing Qualcomm of "engagement theatre".

"Having a well-known and trusted company hold the dominant role that Qualcomm does in the USA telecommunications infrastructure provides significant confidence in the integrity of such infrastructure as it relates to national security".

The Treasury Department's concern is both over national security issues and a fear China would be able to gain a strategic advantage in future 5G networks development.

A view of the US Treasury building seen in Washington DC
A view of the US Treasury building seen in Washington DC

"This is in large part because a weakening of Qualcomm's position would leave an opening for China to expand its influence on the 5G standard-setting process", it went on.

"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. San Diego-based Qualcomm has emerged as one of the biggest competitors to Chinese companies vying for market share in the sector, such as Huawei Technologies Co., making Qualcomm a prized asset. Several Republican members of Congress back CFIUS's intervention, including Majority Whip Sen.

But Qualcomm, in a press statement, said "Broadcom's claims that the CFIUS inquiry was a surprise to them has no basis in fact" and that Broadcom had been interacting with CFIUS "for weeks".

A source familiar with CFIUS' thinking told Reuters on Monday that if Broadcom acquired Qualcomm, the U.S. military had concerns that within 10 years "there would essentially be a dominant player in all of these technologies and that's essentially Huawei". The transaction falls under CFIUS's jurisdiction since Broadcom is now domiciled in Singapore, although it announced at the end of previous year it would return to the USA and plans to do so by May.

Broadcom did not immediately return The Daily Caller News Foundation's request for comment.

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