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US Broadcom Probe Cites Fears China Could Dominate 5G

08 March 2018

Broadcom's CEO Hock Tan joined US President Donald Trump in the White House previous year to announce he was moving Broadcom's headquarters to the US from Singapore - a move that appeared created to appease US officials and facilitate future acquisitions.

Mir noted that Chinese companies such as Huawei, which is also the No. 3 smartphone maker, have increased their engagement in 5G's development and that Huawei owns about 10 percent of 5G essential patents.

"There can be no question that an American Broadcom-Qualcomm combination will provide far more resources for investments and development to that end", the company said. There is also concern that the supply of Qualcomm tech goodies to the USA state may be affected by the move.

Previously, Broadcom has said it would walk away from its $79 per share offer to acquire Qualcomm should the annual meeting be delayed past March 6.

"Qualcomm's partnership with the United States government encompasses efforts to address cybersecurity in the next generation of wireless, 5G and the Internet of things", treasury said.

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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. While much of the CFIUS' national security concerns were not detailed in the letter due to their classified nature, the board did mention worries around Broadcom's "relationships with third party foreign entities and the national security effects of Broadcom's business intentions with respect to Qualcomm".

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

In its letter, treasury heaped praise on Qualcomm for having "led the mobile revolution in digital communications technologies". 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.

An investigation by the CFIUS into a deal that has been proposed, but not yet completed, is highly unusual, and underscores the US' concerns about maintaining its dominance in semiconductors in the face of advances by China. Any changes in supply of these products or services could pose national security concerns.

Broadcom also promised to create a $1.5 billion fund with a focus on innovation to train and educate the next generation of USA engineers to ensure the country's lead in future wireless technology.

US Broadcom Probe Cites Fears China Could Dominate 5G