Broadcom pledges $1.5B innovation fund to reassure regulators

Hannah Rogers
March 8, 2018

Broadcom has responded to a letter from the US Treasury, which outlined the body's worries about its proposed hostile takeover of Qualcomm.

Qualcomm on Monday postponed a shareholder vote on Broadcom's nominees for Qualcomm's board after the committee on foreign investment in the U.S., which treasury leads, ordered a delay to review the deal.

The Committee on Foreign Investment in the U.S. (CFIUS) said in a letter to Qualcomm's attorneys on Monday that it was anxious Broadcom would cut back on Qualcomm's investment in emerging technologies like 5G components in favor of short-term projects, thus opening the door for foreign firms to take the lead.

The proposed takeover of Qualcomm by Broadcom could be the largest ever tech acquisition in history if it is given the go-ahead. If it achieves its goal of acquiring Qualcomm, Broadcom said it expects to have more than 25,000 employees in the U.S.

The foreign entities were not named.

The main stated reason for this don't seem to be any assumption that Singapore-based Broadcom would set about pillaging USA state secrets the moment it got its hands on Qualcomm.

If Qualcomm's position is weakened, treasury said, Chinese companies like Huawei Technologies would gain an opening to become dominant.

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Inevitably Broadcom has whacked out a retaliatory PR entitled "Broadcom Pledges to Make the US the Global Leader in 5G". Treasury noted that a Broadcom takeover would possibly reduce long-term investment to focus on short-term profitability.

The letter also confirmed that Qualcomm had requested an investigation by the panel of Broadcom's takeover of its panel of directors through a proxy vote.

Qualcomm just concluded its 5G day in San Diego, California, where it showed off a number of new demos showcasing what the new Snapdragon 845 can do.

"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 Wednesday, Broadcom said, "with its proven track record of investing in and growing core franchises, Broadcom is committed to making the US the global leader in 5G".

The chip designer said Wednesday that, should its $117bn buyout plan for Qualcomm go through, it will set up a $1.5bn fund to "focus on innovation to train and educate the next generation of engineers in the United States".

It said: "Importantly, Broadcom will fund enhanced R&D through lawful business practices rather than predatory and anticompetitive behaviour".

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