Broadcom vows to invest $1.5B to train United States engineers

Adjust Comment Print

Broadcom Ltd.'s effort to take over rival chipmaker Qualcomm Technologies Inc. has hit a new hurdle, with one arm of the USA government pushing back against the deal on national security grounds.

The secretive Committee for Foreign Investment in the U.S. (CFIUS) issued the order so it could further investigate the national security implications of a possible takeover.

The letter also confirmed that Qualcomm had requested an investigation by the panel of Broadcom's takeover of its panel of directors through a proxy vote.

The response came after the Committee on Foreign Investment in the United States, the government panel known as Cfius that reviews the national security implications of transactions, ordered a delay of Qualcomm's shareholder meeting as Broadcom sought to win a majority of the company's board seats.

'Reduction in Qualcomm's long-term technological competitiveness and influence in standard setting would significantly impact U.S. national security, ' the letter said.

Apple's over-ear headphones could arrive before the year's out
Alongside noise-cancellation, Apple is also said to be incorporating the wireless pairing technology found on the AirPods. In addition to that, the report says the new Apple headphones were scheduled to launch sometime at the end of this year.

CFIUS believes this deal might hurt U.S. national security interests.

"This was a blatant, desperate act by Qualcomm to entrench its incumbent board of directors", the company said in a statement. "Broadcom's claims that the CFIUS inquiry was a surprise to them has no basis in fact".

Broadcom struggled to win CFIUS approval to buy Brocade Communications Systems late past year.

Canyon Bridge Capital Partners LLC, a US -based private equity firm funded by the Chinese government, saw its $1.3 billion acquisition of USA chipmaker Lattice Semiconductor Corp collapse previous year after it was blocked by CFIUS, a rejection subsequently upheld by Trump. Broadcom shareholders are expected to vote on the move in early May. "Articulation of the potential national security concerns, in significant part, is classified". The letter notes that Qualcomm typically ranks second among semiconductor companies in R&D spending, with Intel taking the number one spot. Much of the company's troubles stem from its patent licensing business, which has been in the cross-hairs of competition regulators and is at the center of an ongoing fierce legal battle with Apple over patent fees. But over the past week there has been an increasing call for CFIUS to step in as well for security reasons. Several Republican members of Congress back CFIUS's intervention, including Majority Whip Sen.

The new fund Broadcom is proposing would focus on innovation to train and educate the next generation of engineers in the USA, ensuring America's lead in future wireless technology, it said. "A disruption of Qualcomm's R & D efforts would in effect hand the growing competition for 5G to China". First, Broadcom offered Qualcomm a takeover deal worth $103 billion. It lends weight to Qualcomm's argument that the hostile bid would struggle to get regulatory sign-off. Any limitation on those supplies "could have a detrimental impact on national security", the letter said. On Monday, it extended its $127.50 per share tender offer until March 9.