Broadcom Grovels To Congress For Qualcomm Takeover Approval Pledging 5G Dominance
It appears that Broadcom is looking to get ahead of any potential regulatory concerns that might result from its ongoing aggressive effort to acquire Qualcomm. To quell some of the concerns, Broadcomm inked a letter to Congress assuring members that it has every intention of making the United States a leader in 5G connectivity, and that it would not spend less money on advancing 5G stateside.
In addition, Broadcom promised to create to a new $1.5 billion fund to train and education the next generation of radio frequency engineers in the US. The underlying theme of Broadcom's pitch to Congress is that it will make every effort to ensure the US leads the way in wireless technologies, today and in the future. As part of the that, Broadcom also pledged to work with the US government to achieve its 5G goals, as well as future ones.
Broadcom is trying to convince lawmakers that an acquisition is in the best interest of all involved. Without a buyout, there are a number of challenges that stand in the way of Qualcomm developing 5G, such as raising enough funds for its research and development efforts on licensing revenue, which Broadcom criticized as being predatory and anticompetitive. According to Broadcom, funding R&D into 5G would not require licensing revenue if a takeover were to happen.
The company also did a bit of chest thumping in its letter, pointing out shareholder returns have been eight times greater than that of Qualcomm's over the past five years.
"Ninety percent of Broadcom's shareholders are in the United States; in fact, we are largely owned by the same United States institutional investors that own Qualcomm. More than half of Broadcom's total workforce is in the United States, across more than 25 states, including Texas, Colorado, California and Pennsylvania," Broadcom said.
Should the acquisition happen, Broadcom said it would have more than 25,000 employees in the US. How regulators ultimately respond remains to be seen. To this point, Broadcom's bid to acquire Qualcomm has been fairly unpopular. In particular, the Committee on Foreign Investment in the United States (CFIUS) has raised national security concerns.
"The Committee on Foreign Investment in the United States (CFIUS) issued an interim order to Qualcomm directing it to postpone its annual stockholders meeting and election of directors by 30 days," said the US Department of the Treasury on Sunday in an official statement. "This measure will afford CFIUS the ability to investigate fully Broadcom’s proposed acquisition of Qualcomm."
In short, Broadcom seems to be on an island in thinking this is a good idea.
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