>> The US government calling for a full investigation of Broadcom's takeover bid for rival chip maker Qualcomm, saying the acquisition could pose a risk to national security. In a letter to the two companies, The Committee on Foreign Investment in the United States, which reviews deals for potential national security concerns said that Broadcom's relationships with foreign entities are an issue.
And that it was examining the potential risk of an unnamed actor working through Broadcom to hurt the US. It's an usual move from the inter-agency group, and could complicate or kill an already contentious deal, which Qualcomm hasn't even agreed to yet. Reuters' Stephen Nellis explains.>> This letter showed that CFIUS had concerns, not so much with Broadcom itself, but with third parties in foreign countries that Broadcom does business with.
Now the letter says that the specific concerns are classified, but it does go on to talk quite a bit about how China is coming to invest a lot and start to dominate in 5G technology. The problem as regulators see it is that Broadcom has a history of acquiring companies, and then as part of its bid to make them profitable, cutting that research and development spending.
So they're afraid that if Broadcom carries that strategy out with Qualcomm, that they could reduce Qualcomm's position in the 5G technology race. Now a source familiar with CFIUS is thinking on this matter, says that the US military has concerns that in ten years they will have to go to China for these kinds of technologies.
Whereas right now the US military relies heavily on Qualcomm for contracts and other technologies for wireless communications.>> Singapore-based Broadcom, originally a small Asian tech company called Avago, that swallowed up chip makers around the world, has been trying to force a buyout of Qualcomm. Before it disclosed its plans to purchase Qualcomm, President Donald Trump announced Broadcom would shift its headquarters back to the US.
Broadcom has said once that's done, its bid for Qualcomm could no longer be covered by CFIUS.