Qualcomm deal delay hints at new tech nationalism

The U.S. Treasury is reviewing Broadcom’s proposal to acquire Qualcomm

The U.S. Treasury is reviewing Broadcom’s proposal to acquire Qualcomm

A shift by Chinese companies to dominate 5G "would have substantial negative national security consequences for the United States", the Treasury said.

The US government is concerned that Chinese companies, including big network equipment and mobile-phone maker Huawei Technologies, will take advantage of any openings to take the lead in the next-generation mobile-phone networks known as 5G.

Treasury also cited the Defense Department's reliance on products made by Qualcomm, which is based in San Diego.

A source familiar with CFIUS' thinking told Reuters on Monday that if the deal was completed, the us military was concerned that within 10 years, "there would essentially be a dominant player in all of these technologies and that's essentially Huawei".

Broadcom has sought to acquire Qualcomm since November in what would be the largest tech merger in history at $117 billion, but the US company rejected each offer. Such a move could hurt the US effort to develop 5G wireless technology because of the small existing number of suppliers that build the hardware.

CFIUS asked Qualcomm to delay the Broadcom takeover vote which was supposed to happen on Tuesday. Ordinarily, it only weighs in after a deal is agreed upon - and can recommend that the president block any deal it considers a threat.

CFIUS believes this deal might hurt United States national security interests.

"I support the idea that the committee on foreign investment takes a close look at that to see that American interests are protected", he said. With 11 seats on the Board, Broadcom lobbed in a slate of 6 candidates, hoping that it could win control of Qualcomm and rubber stamp Broadcom's $117 billion bid for the Snapdragon chip designer.

Qualcomm management has repeatedly said it's being undervalued by Broadcom - adding that any deal could be rejected by the government on antitrust grounds.

Broadcom said on March 5 that CFIUS' intervention was the result of secret moves made by Qualcomm on January 29 to seek an investigation into the offer, which Qualcomm's board has said significantly undervalues the company.

Singapore-based Broadcom has been working for weeks on a takeover of rival Qualcomm. Broadcom cried foul, saying this latest turn of events is an "engagement theatre", aimed at changing the will of Qualcomm stockholders. Currently, Broadcom is part of Broadcom Limited located in Singapore.

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