Broadcom moves to ease United States concerns over 5G investment

Broadcom moves to ease United States concerns over 5G investment

Broadcom (NASDAQ:AVGO) releases a letter to members of the U.S. Congress about its desired Qualcomm (NASDAQ:QCOM) acquisition.

Broadcom's $117 billion bid for Qualcomm has warped into a complex fight over regulatory approvals, security nerves about China's influence on global mobile networks and the best way forward financially for one of the world's dominant chipmakers.

Hock Tan, the CEO of the Singapore-based firm, sent a letter to lawmakers on Friday promising that the acquisition poses no threat to the USA leadership in innovation. But the company is in the process of moving its headquarters to the US, which it expects to complete in May.

In the response, Broadcom pledged on Wednesday to maintain Qualcomm's R&D spending on 5G, and to create a new $1.5 billion fund to train and educate the next generation of engineers in the US.

A US national security panel has ordered Singapore-based chipmaker Broadcom (AVGO.O) to provide it with five business days' notice before taking any action toward redomiciling to the United States, three people familiar with the matter said on Friday.

CFIUS worries Broadcom could thwart USA technology leadership - headed by San Diego-based Qualcomm - in 5G networks.

Qualcomm could not immediately be reached for comment. The job of CFIUS is to review acquisitions of US companies by foreign entities to assess potential national security implications. The review of Broadcom's bid illustrates the US government's expanding focus on the competitiveness of the national semiconductor industry as China advances.

"Broadcom will not only maintain the R&D resources Qualcomm devotes to 5G and innovation in future wireless standards - we will also focus R&D spend to those critical technologies that are essential to the US", Broadcom said in a statement, Reuters reports. We also will work closely with the United States government as we drive to achieve and sustain this global leadership in 5G and beyond. Each year it would invest 3 billion dollars in engineering and research and 6 billion dollars in manufacturing thereby resulting in more number of high-paying tech jobs in the U.S. For this it would also pay huge dollars in additional taxes to the U.S. "Broadcom has an experienced team and would know that, from a financial standpoint, this will be a disaster".

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