The soap opera that is Broadcom’s unsolicited attempt to purchase Qualcomm took yet another surprise turn this morning as Qualcomm’s Paul Jacobs—son of founder Irwin Jacobs—said he will relinquish his title as board chairman to an independent director. At the same time, Broadcom promised that, if it is successful in purchasing Qualcomm, it would not sell “any critical national security assets to any foreign companies.”
Today’s revelations are the latest in a series of increasingly high-profile moves by both companies to improve their respective positions. Broadcom, essentially, is arguing against the notion that it will impinge on the United States’ national security and its role in the development of 5G technology through its proposed purchase of Qualcomm; meantime, Qualcomm continues to argue that a Broadcom takeover would represent a setback to the company’s work in wireless, the IoT and other sectors.
Paul Jacobs’ withdrawal from Qualcomm’s management team is the latest effort by the company to convince investors it has a clear-eyed view of the situation. Paul Jacobs, who was Qualcomm’s CEO from 2005 until 2014, will no longer serve as executive chairman of the Qualcomm board, but will continue to serve on Qualcomm’s board—though he will “will no longer serve in an executive management capacity,” according to the company.
Jeffrey Henderson, an independent Qualcomm director since 2016, will serve as the company’s new non-executive chairman.
“The Board is committed to the principles of strong corporate governance and believes that having an independent director as Chairman at this important juncture in Qualcomm’s history is in the best interest of the Company and our stockholders,” explained Qualcomm’s Tom Horton, the company’s lead director, in a statement. “We are focused on maximizing stockholder value, and will consider all options to achieve that objective, as we seek to move Qualcomm forward by closing the acquisition of NXP, strengthening our licensing business, and capitalizing on the enormous 5G opportunity before us.”
Separately, Broadcom’s CEO this morning issued a letter to Congress stating that the company wouldn’t sell any Qualcomm-powered national security assets, arguing that Broadcom “is today in every important respect an American company.”
“When we complete our acquisition of Qualcomm, we expect to have more than 25,000 employees in the United States, working to make Broadcom the leading communication semiconductor company in the world,” Broadcom’s Hock Tan wrote.
This latest series of developments stems from the U.S. Treasury Department’s move through its Committee on Foreign Investment in the U.S. (CFIUS) to engage in a review of Broadcom’s proposed $117 billion hostile takeover of Qualcomm. In a letter announcing the move, the committee voiced clear concerns that a Broadcom takeover of Qualcomm could affect national security as well as the United States’ role in the rollout of 5G technology.
Partly in response to that action, Broadcom this week pledged to create a new $1.5 billion fund “with a focus on innovation to train and educate the next generation of engineers in the U.S.”