Broadcom pledges 5G commitment to keep Qualcomm offer on track

Broadcom pledges 5G commitment to keep Qualcomm offer on track

The U.S. Committee on Foreign Investments said Qualcomm's position in 5G technology was good for national security and expressed concern over the Singapore-based company's ties to foreign organizations.

Broadcom has responded to a letter from the US Treasury, which outlined the body's worries about its proposed hostile takeover of Qualcomm.

The proposed takeover of Qualcomm by Broadcom could be the largest ever tech acquisition in history if it is given the go-ahead.

U.S. 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.

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Broadcom said it's cooperating with the review by CFIUS.

Losing this key role in standards-setting could pose a threat to United States national security and also open up a place for China to fill with its own wireless companies, such as Huawei, CFIUS said.

The firm said it expects 5G to take off faster than 4G, hitting 2.6 billion connections by 2025, more than 20 percent of all mobile subscriptions. Washington has always been wary of acquisitions of sensitive technology, particularly by Chinese buyers, but scrutiny has intensified under Trump, according to lawyers who work on such deals. But over the past week there has been an increasing call for CFIUS to step in as well for security reasons.

Qualcomm included the letter in a filing Monday with the U.S. Securities and Exchange Commission.

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Broadcom, which makes chips for everything from set-top boxes to data centers, on Wednesday vowed to make the U.S. a global leader in 5G, a next-generation cellular technology that's poised to boost wireless speeds, coverage and the ability to handle an ever more diverse deployment of connected devices. "A disruption of Qualcomm's R & D efforts would in effect hand the growing competition for 5G to China".

Qualcomm's shareholders will no longer be meeting Tuesday to weigh in on Broadcom's unsolicited takeover bid for the US chipmaker.

Broadcom has been working to take over rival Qualcomm for weeks and the two companies were closing in on a deal before they disagreed on a price - prompting an attempted hostile takeover. It lends weight to Qualcomm's argument that the hostile bid would struggle to get regulatory sign-off. The company has delayed its annual meeting to April 5.

Qualcomm's shares slipped 41 cents to $64.33, while Broadcom's were down $1.46 at $249.41.

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