Broadcom attacks rival Qualcomm over security review

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"It is critical that Qualcomm stockholders know that Qualcomm did not once mention submitting a voluntary notice to CFIUS in any of its interactions with Broadcom to date", the Singapore-based company said in its statement. The company already is run from the United States, has many USA employees, and owns critical semiconductor operations and technologies, Rasgon noted.

Qualcomm's shareholder vote will now be delayed at least a month as the Committee on Foreign Investment in the US investigates Broadcom's proposed deal.

The meeting was supposed to be Tuesday morning, but the Committee on Foreign Investment in the United States requested a month delay late Sunday after it chose to look at Broadcom Ltd.'s hostile takeover bid for Qualcomm.

A Reuters source "familiar with CFIUS' thinking" reports that as the race to 5G accelerates and Qualcomm continues to rank among the leaders, the San Diego-based chipset company is becoming an especially prized asset for the U.S. Such a move could hurt the USA effort to develop 5G wireless technology because of the small existing number of suppliers that build the hardware.

As noted by The Wall Street Journal, the surprise move signals concerns among US government officials that a Broadcom acquisition of Qualcomm could raise national security issues and potentially affect the United States' role in the development of 5G network technology as China works to take a lead in the space.

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Qualcomm shareholders were set to vote on whether to hand control of the San Diego cellular technology company to Broadcom this morning.

The involvement of CFIUS marks a major blow to the deal.

Still, while the government may not approve of the takeover, a CFIUS review does not necessarily mean the deal will be halted.

Qualcomm's shares fell 4 percent in trading before the bell.

Broadcom most recently offered $79 per share, or $117 billion, for Qualcomm, lowering its previous bid of $82 per share, or $121 billion, after Qualcomm raised its own takeover bid for NXP Semiconductors. Broadcom is the middle of moving its legal domicile back to the United States from Singapore, which should be completed in the next few months.

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Broadcom initiated the proxy vote in early December as part of its takeover bid, initially putting up a slate of 11 new board candidates who favored the acquisition.

The deal was expected to face tough scrutiny from competition regulators.

Qualcomm, which has told shareholders it is open to the merger at the right price and terms, said last week it had no intention of delaying the annual shareholder meeting.

On Sunday, CFIUS instructed Qualcomm to delay by 30 days its annual shareholder meeting, which had been scheduled for Tuesday. Qualcomm is also in a legal battle with Apple over licensing and allegations that it has not delivered on promised rebates - seen by analysts as an effort by Apple to undermine Qualcomm's strong position in mobile chips.

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