Broadcom said today it plans to finish its relocation to the United States by April 3, two days before Qualcomm’s annual stockholder meeting is scheduled to vote for Broadcom’s slate of nominees for Qualcomm’s board. And that action could well remove Broadcom from the purview of the U.S. Treasury Department’s Committee on Foreign Investment in the U.S. (CFIUS).
Further complicating the matter, the The Wall Street Journal reported late last week that Intel is mulling a potential bid for Broadcom in an effort to stymie Broadcom’s pursuit of Qualcomm. In a lengthy article on the topic yesterday, the WSJ noted that a combined Broadcom and Qualcomm could well create serious challenges for Intel in its pursuit of the automotive, data center and mobile markets—thus driving Intel’s desire to block the transaction.
And those are just the latest developments in a blossoming saga that could reshape the world’s semiconductor market—and that has major ramifications for the development of 5G network technology in the United States and globally.
Potentially the most pressing matter today is Broadcom’s announcement this morning that it will complete its “redomiciling to the U.S.” by April 3. Broadcom—based in Singapore with substantial operations in San Jose—initially announced in November it would relocate its headquarters to the United States by May. But by moving that date up it now will take place before Qualcomm’s rescheduled annual meeting of stockholders.
That’s critical because Qualcomm rescheduled that meeting due to the U.S. Treasury Department’s announcement that its CFIUS was reviewing Broadcom’s proposed takeover of Qualcomm because the transaction posed national security concerns—including that the deal would hinder the United States’ role in 5G.
And, according to a new CNBC article today, the CFIUS has confirmed that the proposed transaction does raise national security concerns. And, in a letter it sent to Broadcom yesterday, the committed said it would consider further action, including referring the matter to the president.
“In short, U.S. national security concerns are not a risk to closing, as Broadcom never plans to acquire Qualcomm before it completes redomiciliation,” Broadcom wrote in a statement this morning in its announcement that it would relocate to the United States by April 3. “As a company incorporated in the U.S., Broadcom looks forward to working directly with the U.S. government as a trusted supplier, and continuing Qualcomm's existing engagements.”
Beyond the national security issue, another element hanging over the deal is Intel’s apparent interest in potentially bidding for Broadcom. Intel has been considering such a move since late last year, though it may not actually embark on such a bid, the WSJ noted.
Broadcom launched its bid to take over Qualcomm late last year in a transaction that, if consummated, would be the tech industry’s largest ever. Qualcomm, for its part, has largely resisted the effort.