Republican lawmakers back review of Broadcom's Qualcomm bid

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Further complicating the hostile takeover of Qualcomm by Broadcom, the U.S government is saying that the deal could pose a national security risk, and is calling for a full investigation.

Broadcom has sought to acquire Qualcomm since November in what would be the largest tech merger in history at $117 billion, but the US company rejected each offer.

"This was a blatant, desperate act by Qualcomm to entrench its incumbent board of directors and prevent its own stockholders from voting for Broadcom's independent director nominees", Broadcom said in a statement.

The government committee, which reviews foreign acquisitions of US assets with an eye toward national-security interests, is led by the Treasury Department and includes officials from the departments of Justice, Defense, Homeland Security and Energy.

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The review of the Broadcom deal illustrates the USA government's expanding focus on the competitiveness of the national semiconductor industry as China advances, regulatory experts said. "Articulation of the potential national security concerns, in significant part, is classified". Harm to Qualcomm's innovation would allow China to expand its influence in key wireless technology, the government said. The U.S. remains dominant in setting standards for 5G now, but "China would likely compete robustly to fill any void left by Qualcomm as a result of this hostile takeover", according to the Treasury.

Treasury's letter cited Chinese chip maker Huawei as a competitive threat in the development of 5G. San Diego-based Qualcomm has emerged as one of the biggest competitors to Chinese companies vying for market share in the sector, such as Huawei Technologies Co., making Qualcomm a prized asset.

But Qualcomm, in a press statement, said "Broadcom's claims that the CFIUS inquiry was a surprise to them has no basis in fact" and that Broadcom had been interacting with CFIUS "for weeks". Broadcom is based in Singapore. The company will complete a corporate restructure and be headquartered in the U.S.by May 6, 2018.

Anyway, CFIUS rarely gets involved before a deal is signed – Broadcom and Qualcomm are still negotiating. It's unclear whether the company will attempt to install the friendly board members at Qualcomm's next meeting scheduled April 5.

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