Since Broadcom Corporation (NASDAQ:BRCM) announced its interest in acquiring QUALCOMM, Inc. (NASDAQ:QCOM), the US national security has raised concerns over the possible security risks that could erupt as a result of the hostile bid. The national government has set up a special Committee known as the Committee on Foreign Investment in the US (CFiUS) to investigate into the matter a move that could derail the progression of the deal between the two firms.
The panel is technically focused on the key relationships that Broadcom has with other foreign entities. According to the official letter sent from the US Treasury, the major security concern is that China could take advantage of the deal and compete vigorously thus posing a security threat to the US.
Broadcom has tried to pledge to bring the latest mobile technology into the US market if the government would allow it to acquire Qualcomm but President Trump’s administration is largely concerned with the national security if the deal succeeds. Qualcomm stated that it’s ready to jointly further enhance the mobile technology that would put US into the forefront position in the wireless technology.
Though Broadcom is not Chinese-based, it’s headquartered in Singapore but plans are underway to relocate the firm to the US buy taking over US-based Qualcomm. Some lawmakers in the US have urged the government to intervene and block all the plans with the Chinese entrepreneurs that may possibly corrode Qualcomm’s lead in 5G.
According to AImen N. Mir of the Treasury Department, there are security risks linked to Broadcom’s ties with third party foreign entities that could weaken the current Qualcomm’s long-standing technological competitiveness in the industry. The US is always concerned about Huawei and other China-based companies and a shift to the Chinese dominance service providers could negatively impact on the national security measures in the country.
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