Broadcom sends letter to US Congress, denies national security concerns

Posted March 10, 2018

Broadcom promised Wednesday to make the USA a global leader in new 5G networks in hopes of easing government fears that its hostile takeover of Qualcomm would derail America's mobile technology leadership.

A USA national security panel has ordered Singapore-based chipmaker Broadcom (AVGO.O) to provide it with five business days' notice before taking any action toward redomiciling to the United States, three people familiar with the matter said on Friday.

Broadcom is also planning to create a 1.5 billion dollars fund with an aim at innovation to educate and train the next generation of RF engineers in the United States. It said that when they complete their acquisition of Qualcomm, they expect to have more than 25,000 employees in the United States, working diligently to make Broadcom the leading communication semiconductor company in the world. China wants desperately to take the lead in technology from the US and 5G is only one of several areas they are eager to control.

Broadcom's controversial $117bn bid to acquire Qualcomm is hanging by a thread after USA authorities ordered a postponement of a critical shareholder meeting.

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Broadcom also stated that it would work with the government of United States as it drives to accomplish and sustain the global leadership in 5G.

"They don't invest in risk", said McGregor. The job of CFIUS is to review acquisitions of USA companies by foreign entities to assess potential national security implications.

CFIUS took the rare step this week of publicly intervening in the hostile takeover, ordering Qualcomm to postpone its annual shareholders meeting just days before it was scheduled to take place. Shareholders are voting on whether to replace six Qualcomm board members with Broadcom nominated candidates - which would give Broadcom a board majority. But the company is in the process of moving its headquarters to the USA, which it expects to complete in May.

Tan also promised that if the deal goes through, the combined company will not sell any assets to foreign entities.

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CFIUS, an inter-agency panel led by the U.S. Treasury, rarely reviews mergers before a deal has been clinched.

With the aim of soothing USA security concerns regarding its Qualcomm bid, Broadcom says it will maintain the R&D resources the chipmaker devotes to 5G.

Broadcom shares are up 0.06% to $247.10.

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