US government agency seems to advise against Qualcomm takeover by Broadcom

A US government agency under the Treasury Department that assesses corporate acquisitions for national security purposes has said it may advise President Trump to block the acquisition.

The agency, CFIUS, explained in a letter that the potential acquisition of Qualcomm by Singapore-based Broadcom poses risks to US national security and that multiple steps are under consideration, including submitting the transaction to President Trump, likely. with the advice to block the takeover.

The letter states that Broadcom has violated a previous agency order by relocating Broadcom’s headquarters from Singapore to the US more quickly. Broadcom would thus have deliberately shortened the duration of the CFIUS investigation. The agency says that Broadcom can still submit information to change its negative opinion about the acquisition.

Earlier it became clear that CFIUS was investigating the possible share transaction worth 117 billion dollars. CFIUS recently interfered with the acquisition plans on behalf of the ministry by demanding that the Qualcomm shareholders’ meeting scheduled for March 6 be postponed by at least 30 days.

National security concerns are linked, among other things, to the expectation that Qualcomm’s R&D budget will be severely curtailed following its acquisition by Broadcom. This would weaken Qualcomm’s position in the field of 5G standardization and technology, for example, giving Chinese companies more room to fill the gap.

The Wall Street Journal recently reported that Intel is closely monitoring the takeover battle between Broadcom and Qualcomm. Intel may want to acquire Broadcom to keep competition in the semiconductor market under control.