It's been an extremely busy couple of months for both Qualcomm and Broadcom, as the latter continues to pursue a hostile takeover.
"This shows how indirect exposure to China is a frequent, but under-noticed, source of perceived national security risk", said Mario Mancuso, a former CFIUS member who is now a partner at law firm Kirkland & Ellis LLP.
Qualcomm just concluded its 5G day in San Diego, California, where it showed off a number of new demos showcasing what the new Snapdragon 845 can do.
The 5G pledge comes after a US government panel, the Committee on Foreign Investment in the US (CFIUS) expressed concerns about Broadcom's acquisition of Qualcomm and said such a deal could pose a national security risk.
Broadcom has been telling shareholders Qualcomm sought a review by the Committee on Foreign Investment in the United States and didn't tell its shareholders or Broadcom. CFIUS also intends to investigate whether the deal would limit the supply of Qualcomm products or services to the United States government, or whether it would threaten the integrity of those products and services.
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An investigation by the CFIUS into a deal that has been proposed, but not yet completed, is highly unusual, and underscores the US' concerns about maintaining its dominance in semiconductors in the face of advances by China.
In a Monday statement, Broadcom said Qualcomm had "secretly" asked the CFIUS to investigate back at the end of January. 6, a move it has argued should not make it subject to a review on national security concerns.
The proposed takeover of Qualcomm by Broadcom could be the largest ever tech acquisition in history if it is given the go-ahead. This means the USA government is going to look into whether Broadcom's acquisition of Qualcomm can threaten the national security of the U.S.
Mir noted that Chinese companies such as Huawei, which is also the No. 3 smartphone maker, have increased their engagement in 5G's development and that Huawei owns about 10 percent of 5G essential patents. Any limitation on those supplies "could have a detrimental impact on national security", the letter said. The uncertainty associated with such investigations, which are seen as politicized and offer little transparency, often dooms potential deals before a conclusion is reached.
In contrast to the casual geopolitical xenophobia of the "we don't want our companies acquired by dodgy foreigners" argument, the fear asset stripping on an unprecedented scale would appear to have a bit more substance.
On that day, Broadcom Chief Executive Hock Tan stood in the White House and pledged to bring jobs to the USA - a move that won him praise from President Trump.