What You Need to Know About Broadcom’s Attempt to Buy Qualcomm | NTK Network What You Need to Know About Broadcom’s Attempt to Buy Qualcomm

What You Need to Know About Broadcom’s Attempt to Buy Qualcomm

The Singaporean company announced on Nov. 2 last year it would move back to the U.S., and made public its attempted takeover of U.S.-based Qualcomm on Nov. 6.

By NTK Staff | 03.09.2018 @8:00am
What You Need to Know About Broadcom’s Attempt to Buy Qualcomm

Two chipmakers are locked in a bitter dispute that could have a deep impact on the smartphone you use and on advances in 5G technology.

Singapore-based chipmaker Broadcom announced on Nov. 2, 2017 that it intends to move its headquarters back to the U.S. Broadcom CEO Hock Tan made the announcement at an event hosted by the White House.

Four days later, Broadcom announced its unsolicited bid to buy U.S. chipmaker Qualcomm for $105 billion, a proposal that was ultimately rejected by Qualcomm’s board of directors.

Qualcomm is best known for producing the fastest modem chips on the market. Their products can be found in Apple’s iPhones, Samsung’s Galaxy phones, and many others. Currently, Qualcomm is developing 5G wireless technology, designed to be the fastest in the industry.

After a series of Broadcom offers and Qualcomm rejections, the Committee on Foreign Investment in the United States (CFIUS) agreed to review the attempted takeover this week, which could determine whether U.S. officials would even allow such a takeover.

At stake may be the future of 5G. Although Broadcom has made overtures that include making the U.S. “the global leader in 5G,” there are real and serious national security factors at play, as well:

While many of the specific concerns of CFIUS are classified, the body disclosed that it’s looking at “the risks associated with Broadcom’s relationships with third party foreign entities,” as well as the “national security effects of Broadcom’s business intentions with respect to Qualcomm,” according to the letter, which was written by a Treasury Department official.

One big concern is that the takeover would cause the United States to fall behind on the development of 5G technology, giving China an edge.

Right now, Qualcomm is the “current leading company in 5G technology development and standard setting,” according to the memo.

Broadcom has a reputation for prioritizing short-term profits and cutting back on research and development. If Broadcom were able to take over Qualcomm and began cutting back on R&D, it could give Chinese competitors like Huawei an advantage.

Broadcom’s attempted takeover of Qualcomm and the national security risks it poses drew the attention of members of Congress. Sens. John Cornyn (R-TX) and Tom Cotton (R-AR) asked federal regulators to look into the deal.

The U.S. government asked Qualcomm to delay an annual shareholder meeting that could have moved the Broadcom deal forward until April 5.

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