Broadcom says to stick with USA 5G investment after Qualcomm deal

Broadcom says to stick with USA 5G investment after Qualcomm deal

Qualcomm's shareholders will no longer be meeting Tuesday to weigh in on Broadcom's unsolicited takeover bid for the USA chipmaker. Some relate to Broadcom's relationships with third party foreign entities.

"While the United States remains dominant in the standards-setting space now, China would likely compete robustly to fill any void left by Qualcomm as a result of this hostile takeover", the letter said.

Qualcomm, with its Snapdragon processors, is the world's biggest maker of mobile chips and an attractive target for Broadcom.

"It is critical that Qualcomm stockholders know that Qualcomm did not once mention submitting a voluntary notice to CFIUS in any of its interactions with Broadcom to date, including in the two meetings on February 14, 2018 and on February 23, 2018".

Broadcom notes that it is in the process of moving its official headquarters from Singapore to the USA, in part to assuage any worries over national security threats.

In a statement Wednesday, Broadcom said, "with its proven track record of investing in and growing core franchises, Broadcom is committed to making the US the global leader in 5G".

Bloomberg reported Monday that Broadcom's board candidates were getting substantial support from angry Qualcomm shareholders in early voting.

In a letter explaining the grounds for investigation, Treasury cited Qualcomm's "unmatched expertise and research and development expenditure", which drives its ability to set standards for the next generation of wireless technology known as 5G. The USD 106 billion in debt financing arranged by Broadcom would be the largest corporate acqusition loan ever, the letter noted, putting further pressure on the company to boost profitability in order to service its debt. In a statement published Wednesday, the company hit back against the CFIUS statement and Qualcomm, while also offering an olive branch to try and appease regulators.

The letter raised concerns over Broadcom's plans for Qualcomm's patent licensing arm, which funds much of its research and development.

Broadcom said it is run by a board of directors and senior management team consisting nearly entirely of Americans.

Broadcom has started a new offensive in its effort to take over Qualcomm, promising to invest Dollars 1.5 billion to train engineers in the USA and make the country a leader in 5G technology.

Shares of Qualcomm fell almost 3% in NY trading Tuesday. Broadcom's shares were up slightly at $247.90.