US: Broadcom offers a $1.5-bn pledge to national security concerns over Qualcomm

Broadcom said it plans to create a new $1.5-billion fund to ensure America’s lead in future wireless technology, responding to US government concerns that the chip maker’s proposed takeover of Qualcomm Inc. could hurt its competitiveness and threaten national security.

The Committee on Foreign Investment in the United States, led by the Treasury, is investigating the $117-billion offer by Broadcom on national security grounds, an unusual move that threatens to derail what would be the largest-ever semiconductor merger.

In a letter explaining the grounds for investigation, Treasury cited San Diego-based 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. Treasury noted that a Broadcom takeover could reduce long-term investment to focus on short-term profitability.

The committee said that Qualcomm’s leading position in 5G technology is good for national security and expressed concerns over Broadcom’s ties to foreign organizations.

One of the fears from CFIUS was that a merger would result in reduced investment in research and development, clearing the way for Chinese competitors to gain influence over the future of 5G technology.

Full Content: Wall Street Journal

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