Industryweek 28392 Semiconductors 0

Broadcom Warned of Possible Veto Over Qualcomm Bid

March 12, 2018
The U.S. Treasury said a group that reviews purchases of American firms by foreign investors, has confirmed national security threats related to the Qualcomm acquisition by Broadcom.

U.S. national security officials are threatening to recommend that President Donald Trump block Broadcom Ltd.’s proposed takeover of rival chipmaker Qualcomm Inc., according to a Treasury Department letter made public on March 12.

An investigation of the deal by the Committee on Foreign Investment in the U.S. (CFIUS), which reviews purchases of American firms by foreign investors, has confirmed national security threats related to the Qualcomm acquisition by Singapore-based Broadcom, Treasury said in the letter.

"In the absence of information that changes CFIUS’s assessment of the national security risks posed by this transaction, CFIUS would consider taking further action, including but not limited to referring the transaction to the president for a decision," Treasury said. Only the president can block a foreign takeover on national security grounds.

The letter appears to dim Broadcom’s chances of moving ahead with its $117 billion takeover of Qualcomm. CFIUS, which is led by Treasury, has ordered Broadcom to submit information to the panel by noon Monday ahead of a meeting between CFIUS officials and Broadcom Chief Executive Officer Hock Tan, its general counsel, and chief technology officer, according to the letter.

CFIUS on March 4 ordered Qualcomm to postpone a shareholder meeting to vote on Broadcom’s nominees to Qualcomm’s board. Broadcom aimed to win control of the board so it could advance with its hostile takeover. Treasury said Broadcom violated that order by not giving proper notice about moving its headquarters to the U.S.

Broadcom said on March 12 that it has been "fully transparent" with CFIUS and is in "full compliance" with the March 4 order. The company, which announced its plan to move to the U.S. last year, said it is "in all important respects a U.S. company" and has previously won approval from CFIUS for acquisitions of American businesses.

"U.S. national security concerns are not a risk to closing, as Broadcom never plans to acquire Qualcomm before it completes redomiciliation," it said.

The national security panel told Qualcomm in a March 5 letter the sale to Broadcom could hurt the chipmaker’s competitiveness by reducing research and development, which would threaten U.S. security.

By David McLaughlin

Popular Sponsored Recommendations

Simplify Partner Engagement: A Guide for Manufacturers

Sept. 11, 2023
Design a winning partner program. Make selling faster and easier for partners, to increase mutual success with the help of automation. Download this guide to learn more about ...

See how 3M Enabled B2B Buyers with Trustworthy Self-Service Buying Experiences

Sept. 11, 2023
This one-pager explores the importance of enabling B2B buyers with self-service purchasing experiences that engender trust and provides insights into the steps businesses can ...

Ecommerce Guide: How to Manage Order Volume Spikes

Oct. 2, 2023
Master the art of delivering a seamless ecommerce shopping experience! Learn how to streamline your operations to successfully manage seasonal sales order spikes.

Shifting Your Business from Products to Service-Based Business Models: Generating Predictable Revenues

Oct. 27, 2023
Executive summary on a recent IndustryWeek-hosted webinar sponsored by SAP

Voice your opinion!

To join the conversation, and become an exclusive member of IndustryWeek, create an account today!