The hostile bid for telecom giant Qualcomm that chipmaker Broadcom is pursuing has been confirmed as a national security risk, according to the interagency Committee on Foreign Investment in the United States (CFIUS).
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CFIUS said in a letter to Broadcom that the concerns it raised earlier this month regarding the transaction have been confirmed after an investigation. Broadcom violated CFIUS rules “on at least three separate occasions,” by taking action to move its headquarters to the U.S. without giving the committee proper notification. Broadcom is currently headquartered in Singapore, where it relocated from the U.S. for tax purposes, and is seeking to speed up its move back. Broadcom’s CEO, Hock Tan, announced in November at a White House press conference that the company would return to the U.S., citing the Republican Party’s tax overhaul that President Donald Trump would sign the following month.
The committee, chaired by the Treasury Department, requested more information from Broadcom, and without it, said it would consider deferring to Trump for further action.
Broadcom has been engaged for months in a $117 billion takeover attempt for San-Diego-based Qualcomm, valued at more than $100 billion; Qualcomm has rejected bids. Now Broadcom is seeking to acquire a majority of seats on the target company’s board.
The federal government is involved in the transaction because Qualcomm does sensitive work for the U.S., according to The Wall Street Journal. The U.S.-based technology giant is a leader in wireless technologies, including 5G connectivity. There are concerns that the takeover could decrease the competitive advantage of the U.S. in the wireless technology sector.