Broadcom Pledges To Make US the Global Leader in 5G

Broadcom to Stick With US 5G Investment After Qualcomm Deal

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.

In a letter to Qualcomm, CFIUS said it was concerned that the deal posed a threat to US national security.

A Qualcomm spokeswoman was not immediately available for comment. The review of Broadcom's bid illustrates the USA government's expanding focus on the competitiveness of the national semiconductor industry as China advances.

That meeting was rearranged from the 6th March, after the US Treasury Department ordered a 30-day postponement this week, to fully evaluate any potential national security threats raised by the takeover.

Qualcomm also said Tom Horton would continue as its lead director.

A weakened Qualcomm could hand over 5G telecommunications prowess to Huawei Technologies and perhaps other Chinese companies, which have been investing heavily to gain a beach head in 5G technology ahead of the transition from 4G networks. "Communications likely has precedence, though, because if you can control, or at least monitor all communications, you can better control your citizens and monitor other governments".

Broadcom did not mention CFIUS in its announcement on Wednesday but said the company intends to "maintain the [research and development] resources Qualcomm devotes to 5G and innovation in future wireless standards". "Recall that Oracle did a hostile takeover of Peoplesoft and promised to do a number of things to get approval and then didn't once the deal was done".

Since 5G networks are expected to begin rolling out in 2019, Broadcom's pledge to maintain R & D spending comes after most of the hard, fundamental research is finished, said Jim McGregor, principal analyst with technology consulting firm Tirias Research.

USA lawmakers for years have been wary of Chinese companies such as Huawei and ZTE, saying their close relationships with the Chinese government represent a national security threat.

The Committee on Foreign Investment in the US (CFIUS) said in a letter, cited by the New York Times, that it believes that Broadcom's bid "could pose a risk to the national security of the United States".

The company also said it would create a $1.5 billion fund to train and educate engineers in the U.S.

Lawyers that specialize in advising companies on CFIUS matters have been debating this week whether Broadcom's bid would be subject to a CFIUS review once it redomiciles.

"Ninety percent of Broadcom's shareholders are in the United States; in fact, we are largely owned by the same United States institutional investors that own Qualcomm. Broadcom has an experienced team and would know that, from a financial standpoint, this will be a disaster".

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