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Published: Tue, March 06, 2018
Economy | By Melissa Porter

Qualcomm says Broadcom deal opens national security issues

Qualcomm says Broadcom deal opens national security issues

The ugly rhetorical war between semiconductor companies Broadcom and Qualcomm got even uglier on Monday.

As the request was made 48 hours before Qualcomm's Annual Meeting was due to take place, Broadcom suspects that the move was a means to delay a vote which could see Qualcomm board members replaced - and change the rules of the game when it came to a potential merger.

According to the company, CFIUS has determined there are "national security risks" to a potential Broadcom-Qualcomm merger, and so has asked Qualcomm to delay the meeting.

Qualcomm went on to challenge an assertion that wasn't exactly what Broadcom had asserted.

Broadcom was a U.S. company until it was bought in 2016 by Singapore's Avago, which chose to use the name Broadcom.

Qualcomm (NASDAQ:QCOM) fires back at Broadcom's (NASDAQ:AVGO) claim that it was surprised by the CFIUS investigation.

"Broadcom continues to pursue the redomiciliation process as expeditiously as possible", Broadcom said."Upon completion of the redomiciliation, Broadcom's proposed acquisition of Qualcomm will not be a CFIUS covered transaction".

"The Committee on Foreign Investment in the United States (CFIUS) issued an interim order to Qualcomm directing it to postpone its annual stockholders meeting and election of directors by 30 days", said the U.S. Department of the Treasury on Sunday in an official statement. "This brings Qualcomm's "engagement theater" to a new low".

Broadcom executives a year ago started the process of moving the company's headquarters from China to the United States, a move that could remove numerous hurdles in future acquisitions.

The SEC has cleared Broadcom's preliminary proxy statement. "This was a blatant, desperate act by Qualcomm to entrench its incumbent board of directors and prevent its own stockholders from voting for Broadcom's independent director nominees".

Last week, - a move that might have national security implications for the development of 5G technology in America.

Broadcom's proposed takeover of Qualcomm would be the largest deal ever in semiconductors, creating a chip juggernaut with a leading market position in many top chips used in smartphones.

Reuters had reported last week that CFIUS had begun looking at Broadcom's bid amid growing pressure from politicians, including senior Republican Senator John Cornyn. Qualcomm is one of the few major corporations with a global reach to be headquartered in a city known mainly for tourism, and smaller defense and life-sciences firms.

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