Broadcom dangles 5G promise to save Qualcomm deal

  • Broadcom dangles 5G promise to save Qualcomm deal

Broadcom dangles 5G promise to save Qualcomm deal

The panel has identified potential risks that warrant a full probe, a senior US Treasury official said in a letter to the companies on Monday.

Mr Cornyn said on Monday he was glad CFIUS chose to review the deal, noting aggression by " rivals, like China".

The Qualcomm inquiry comes as lawmakers in Washington are considering a bill that would toughen national security reviews of overseas deals by broadening CFIUS's authority.

The proposed deal could weaken Qualcomm's standing and leave an opening for China to exert more influence over 5G standard setting, the letter continues. President Trump announced a punitive tariff against steel imports earlier this week in what Forbes described as more of a political move than an intention to start a trade war. In this instance, the committee, which is made up of representatives from multiple federal agencies, is taking a proactive role and investigating before an acquisition agreement has even been signed. Washington has always been wary of acquisitions of sensitive technology, particularly by Chinese buyers, but scrutiny has intensified under President Donald Trump, according to lawyers who work on such deals.

However, Broadcom is not a Chinese company.

Perhaps its not that surprising, the U.S. has been pretty negative towards foreign companies lately. Several lawmakers have also pushed to expand the scope of the group's authority.

The US national security panel examining the implications of the proposed takeover of Qualcomm by Broadcom believe that it would put US national security at risk. As a result, the company argued, it should not be subject to a committee review.

Broadcom said in a statement Monday that it had to delay its annual shareholders meeting on short notice after learning Sunday that Qualcomm had asked for the CFIUS investigation.

The CFIUS panel consists of officials from the U.S. defence, justice, treasury, commerce, state, energy and security departments, but it normally only investigates deals after they have been closed.

The CFIUS has been active in blocking Chinese efforts to buy up USA companies, but this appears to be the first time the obscure committee has inserted itself in an active takeover process.

A CFIUS review in itself does not mean a deal will be halted. The government specifically cited Huawei, the Chinese telecom equipment giant, as a potential competitor that would move into the breach. The company will complete a corporate restructure and be headquartered in the May 6, 2018.

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.