Feds warn Broadcom takeover of Qualcomm could threaten national security

The U.S. government says Singapore-based Broadcom’s hostile takeover bid of Qualcomm poses a possible threat to national security, arguing that the acquisition could threaten America’s standing as a leader in developing 5G networks and other emerging technology.

In a letter to Qualcomm dated Monday and released Tuesday, the Committee on Foreign Investment in the U.S. (CFIUS) said it was worried Broadcom’s takeover would threaten Qualcomm’s investments in research and development, opening a doorway for China to overtake the U.S. in innovation.

“While the United States remains dominant in the standards-setting space currently, China would likely compete robustly to fill any void left by Qualcomm as a result of this hostile takeover,” the letter reads. “Given well-known U.S. national security concerns about Huawei and other Chinese telecommunications companies, a shift to Chinese dominance in 5G would have substantial negative national security consequences for the United States.”

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Qualcomm agreed to postpone its annual shareholder meeting this week in order for the panel to investigate the takeover bid. Bloomberg reported that Broadcom’s slate of board of director candidates was expected to be elected at the meeting.

The government’s move, however, could spoil Broadcom’s efforts to take over the American company.

Sen. Tom Cotton (R-Ark.), who has urged a crackdown on Huawei’s forays into the U.S. market, praised the CFIUS intervention on Monday.

“Qualcomm’s work is too important to our national security to let it fall into the hands of a foreign company — and in a hostile takeover no less,” Cotton said in a statement.  

“It’s hard to see a good reason why we should hand over one of our leading computer-chip makers, and thereby give Chinese companies a leg-up in the race to develop 5G and the next generation of technology,” he added. “Better to keep it in American hands and protect American national security.”

Updated: 4:10 p.m.