Broadcom Pledges 5G Investment to Win Qualcomm Deal Approval

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USA regulators have cited concerns over China's influence on the 5G standard-setting process in announcing an investigation into Singapore-based Broadcom's hostile takeover of Qualcomm.

Mir noted that Chinese companies such as Huawei, which is also the No. 3 smartphone maker, have increased their engagement in 5G's development and that Huawei owns about 10 percent of 5G essential patents.

The letter raised red flags about a Broadcom takeover possibly weakening Qualcomm long-term competitiveness in telecommunications technologies and standard setting - opening the door for Chinese companies such as Huawei to become dominant players in upcoming 5G networks.

Broadcom's proposed takeover of Qualcomm would be the largest deal ever in semiconductors, creating a chip juggernaut with a leading market position in many top chips used in smartphones. Last we heard, Qualcomm had set an asking price of $160 billion for the buyout after months of back-and-forth between the two tech giants, but now any possible deal may have completely hit the rocks due to outside interference.

"There can be no question that an American Broadcom-Qualcomm combination will provide far more resources for investments and development", Broadcom said in a statement.

The letter was only made public by Qualcomm on Tuesday 6 March and is a rarity as the CFIUS rarely weighs in on deals it is examining. Qualcomm said it received the letter on Sunday.

"Qualcomm's partnership with the U.S. government encompasses efforts to address cybersecurity in the next generation of wireless, 5G and the Internet of things", treasury said. Broadcom shareholders are expected to vote on the move in early May.

Assuming its aim was to scupper Broadcom's hostile takeover, the Qualcomm board seems to have played a blinder in getting the CFIUS involved.

Broadcom said it is cooperating with the investigation.

On Wednesday, Broadcom tried to assure regulators that it is emphasizing investments in research and development.

"We can not overstate the likely harm (from a Broadcom hostile takeover) that would result to Qualcomm, the USA company leading the development of 5G and other next-generation technologies, as well as to the United States security interests", said the Gallagher letter.

Qualcomm also is a product supplier to the US government and is working with it on cybersecurity for the next generation of wireless, 5G and the Internet of Things, according to the letter. Broadcom's shares were up slightly at $247.90.

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