Qualcomm Drama Delayed Amid National Security Review

Qualcomm shareholder meeting pushed forward by a month

Qualcomm's shareholders will no longer be meeting Tuesday to weigh in on Broadcom's unsolicited takeover bid for the US chipmaker.

At the meeting, shareholders would have been able to vote on the replacement of six Qualcomm board members with candidates put forward by Broadcom-if they did so, this would effectively be an endorsement of the takeover.

In its letter, treasury heaped praise on Qualcomm for having "led the mobile revolution in digital communications technologies".

The Committee is particularly concerned that if Qualcomm does not maintain its position as one of the top investors in semiconductor research, it could lose its leading position in helping to determine worldwide industry standards. "Entrusting this effort to a failing Qualcomm management who lacks the support of its owners, and that pays out much of its excess cash flow in fines as a result of serial lawbreaking, would not be in America's long-term interests".

Broadcom, based in Singapore, has pledged to move its headquarters to the USA, which it believes would remove CFIUS jurisdiction. If it achieves its goal of acquiring Qualcomm, Broadcom said it expects to have more than 25,000 employees in the U.S.

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"Qualcomm's partnership with the U.S. government encompasses efforts to address cybersecurity in the next generation of wireless, 5G and the Internet of things", treasury said.

For more than three years, Qualcomm's stock has been weighed down while the stock market overall has soared.

"Broadcom will not only maintain the R&D resources Qualcomm devotes to 5G and innovation in future wireless standards - we will also focus R&D spend to those critical technologies that are essential to the U.S".

Broadcom said it is run by a board of directors and senior management team consisting nearly entirely of Americans. In a statement published Wednesday, the company hit back against the CFIUS statement and Qualcomm, while also offering an olive branch to try and appease regulators. Harm to Qualcomm's innovation would allow China to expand its influence in key wireless technology, the government said. Any changes in supply of these products or services could pose national security concerns.

While the intervention could scupper the deal, Broadcom is apparently still "optimistic" the CFIUS will approve any final deal, according to CNBC's sources, and the Singapore-based firm said in a statement that it is "fully cooperating" with the review. Both trade on the Nasdaq.

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