Broadcom pledges $1.5B innovation fund to reassure regulators

Broadcom pledges $1.5B innovation fund to reassure regulators

Qualcomm had not responded to a request for comment at the time of writing.

The company said Wednesday that it expects the move to be completed by May.

Those opposed to Broadcom's $117 billion bid for Qualcomm say it would put the a disadvantage in the 5G race against China, and potentially create national security issues.

The Committee on Foreign Investment in the US, led by the Treasury, is investigating the $117 billion offer by Broadcom on national seucurity grounds, an unusual move that threatens to derail what would be the biggest deal in the history of technology.

The big deal going on between tech giants in Broadcom and Qualcomm is reaching new levels, with a USA government national security panel seeing potential risks in Broadcom's want to acquire Qualcomm.

As expected, Broadcom didn't take the news lying down.

Broadcom used to also be a USA company until it relocated to Singapore in 2015 for tax purposes, and it is in the process of reincorporating in the U.S. That's a concern for the government, as Qualcomm is critical to maintaining the US's position of leadership in semiconductors and wireless networking.

A source familiar with CFIUS' thinking said 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, and then the American carriers would have no choice".

The announcement comes two days after the government sent Broadcom and Qualcomm a letter outlining reservations about a potential tie-up between the two chip makers. But it now appears willing to continue to pursue its bid for Qualcomm through the CFIUS review, said Bernstein Research Analyst Stacy Rasgon in a research note.

CFIUS can approve or propose changes to deals, but only the president can block a transaction on national security grounds.

The risks of the potential deal "warrant a full investigation".

Broadcom first bid $70 a share, or $105 billion, for Qualcomm in November in what would be biggest deal ever in technology, far higher than Dell Inc.'s $67 billion acquisition of EMC Corp.

The US Treasury Department is anxious that Broadcom's plan to buy Qualcomm could pose a national security threat.

These days, the US government is keeping Chinese companies at bay while mentioning national security. In the end, that approval came just weeks after Broadcom Chief Executive Officer Hock Tan announced in an Oval Office ceremony with Trump that Broadcom would bring its headquarters to the United States.

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