It's been an extremely busy couple of months for both Qualcomm and Broadcom, as the latter continues to pursue a hostile takeover.
Last month, USA semiconductor testing company Xcerra Corp said CFIUS had blocked its $580 million sale to a Chinese state-backed semiconductor investment fund. The US official who wrote the letter referenced worries about the potential for China to "compete robustly to fill any void left by Qualcomm as a result of this hostile takeover" and noted existing concerns around Chinese companies like Huawei.
Broadcom Ltd.'s effort to take over rival chipmaker Qualcomm Technologies Inc. has hit a new hurdle, with one arm of the US government pushing back against the deal on national security grounds.More news: TODAY'S FORECAST: Snow, high near 35
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.
The big deal going on between tech giants in Broadcom and Qualcomm is reaching new levels, with a United States government national security panel seeing potential risks in Broadcom's want to acquire Qualcomm.
The Treasury Department laid out its concerns in a letter to both chipmakers explaining its Sunday order to delay Qualcomm's annual shareholder meeting.More news: The World's Richest Arabs 2018
As expected, Broadcom didn't take the news lying down. Broadcom is now based in Singapore, but has promised to relocate to the U.S. if the deal is approved.
The government's action highlighted growing U.S. concerns about safeguarding semiconductor technology and cast a doubt on the deal's success. 6, a move it has argued should not make it subject to a review on national security concerns. Some of the concerns to the USA government over national security involve Broadcom's relationships with foreign entities, but no names were released.
Reuters reported last week that CFIUS had begun looking at Broadcom's bid amid growing pressure from lawmakers, including President Donald Trump's fellow Republicans in Congress.More news: Rahul Gandhi accuses BJP of 'usurping' power, forming 'opportunistic' alliance in Meghalaya
The proposed takeover of Qualcomm by Broadcom could be the largest ever tech acquisition in history if it is given the go-ahead. That would have opened the door further to Broadcom taking over Qualcomm. He has proposed legislation to tighten CFIUS' scrutiny of deals. A source familiar with CFIUS says that if the deal goes through, there may be no other option for American carriers than to rely on Huawei. Broadcom, which is based in Singapore, has its co-headquarters in San Jose, and is in the process of moving its entire legal headquarters to the United States this year.