Broadcom vows to invest $1.5B to train United States engineers

Broadcom's Qualcomm bid gets a kick in the groin from the US government

Broadcom's Qualcomm bid gets a kick in the groin from the US government

United States 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. The committee said this could then lead to lower investment in R&D due to pressure to focus on profitability in the short-term.

"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. Last we heard, Qualcomm had set an asking price of $160 billion for the buyout after months of back-and-forth between the two tech giants, but now any possible deal may have completely hit the rocks due to outside interference.

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.

At the meeting - previously scheduled for Tuesday - the San Diego company's shareholders are to vote on whether to hand control to Broadcom by putting Broadcom-backed candidates on Qualcomm's board of directors. The company said in a statement that it is cooperating with CFIUS and is committed to making the combined company a global leader in 5G and other technologies.

There's been yet another twist in the ongoing saga of Broadcom's attempt to take over Qualcomm. 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 is run by a board of directors and senior management team consisting nearly entirely of Americans.

Some on Wall Street and in government have been vociferously against the proposal, partly because of the idea that Broadcom might cut Qualcomm jobs, but also because of the importance of the companies' products-chips for telecommunications equipment-in the upcoming wave of "5G" mobile broadband technology. Harm to Qualcomm's innovation would allow China to expand its influence in key wireless technology, the government said. 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.

Qualcomm's shares slipped 41 cents to $64.33, while Broadcom's were down $1.46 at $249.41.

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