USA 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. According to the letter, Huawei has been increasing its research and development work in 5G and owns about 10 percent of essential patents for 5G technology. The committee said this could then lead to lower investment in R&D due to pressure to focus on profitability in the short-term.
The proposed takeover of Qualcomm by Broadcom could be the largest ever tech acquisition in history if it is given the go-ahead. There is also concern that the supply of Qualcomm tech goodies to the USA state may be affected by the move.
The Committee on Foreign Investment in the U.S. (CFIUS) said in a letter to Qualcomm's attorneys on Monday that it was anxious Broadcom would cut back on Qualcomm's investment in emerging technologies like 5G components in favor of short-term projects, thus opening the door for foreign firms to take the lead. "Entrusting this effort to a failing Qualcomm management who lack the support of its owners, and that pays out much of its excess cash flow in fines as a result of serial lawbreaking, would not be in America's long-term interests".
In a statement, Broadcom said that it would not only maintain Qualcomm's current spending on research and development but that it would also increase that amount.
In its letter, treasury heaped praise on Qualcomm for having "led the mobile revolution in digital communications technologies". If it achieves its goal of acquiring Qualcomm, Broadcom said it expects to have more than 25,000 employees in the U.S.
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Qualcomm also is a product supplier to the US government and is working with it on cybersecurity for the next generation of wireless, 5G and the Internet of Things, according to the letter.
Broadcom said it's cooperating with the review by CFIUS.
Broadcom has a message for United States regulators: We'll make 5G technology a priority and invest in America if you let our bid for Qualcomm go through. Any changes in supply of these products or services could pose national security concerns.
Broadcom said Wednesday it will do practically whatever its takes to make the United States "the global leader" in 5G wireless technology, including investing $1.5 billion to set up a fund for training and educating American engineers. Broadcom's shares were up slightly at $247.90.