Broadcom is trying to reassure members of Congress about its proposed takeover of Qualcomm as an inter-agency panel considers whether to block the deal on national security grounds,.
Hock Tan, the CEO of the Singapore-based firm, sent a letter to lawmakers on Friday promising that the acquisition poses no threat to the U.S. leadership in innovation.
His letter follows an announcement by the Committee on Foreign Investment in the U.S. (CFIUS), which includes representative from several U.S. agencies and departments, said that it was concerned that the takeover would cause the U.S. to fall behind in the global race to build reliable 5G wireless networks — threatening U.S. security.
“Broadcom is committed to making the United States the global leader in 5G,” Tan wrote in his letter. “Any notion that a combined Broadcom-Qualcomm would slash funding or cede leadership in 5G is completely unfounded. We have a proven track record of investing in and growing core franchises in the companies we acquire. In the case of Qualcomm, this will be 5G cellular.”
Tan also promised that if the deal goes through, the combined company will not sell any assets to foreign entities.
CFIUS took the rare step this week of publicly intervening in the hostile takeover, ordering Qualcomm to postpone its annual shareholders meeting just days before it was scheduled to take place. Broadcom was expected to win a majority of seats on Qualcomm’s board of directors at the meeting.
In a letter to Qualcomm, CFIUS said it was concerned that the deal posed a threat to U.S. national security. The panel said that if Broadcom decided to slash Qualcomm’s R&D investments it could lead to Chinese competitors like Huawei surpassing the U.S. in innovation.
CFIUS, which is led by Treasury Secretary Steve Mnuchin, can recommend that a president block a business deal on national security grounds, though its objections can also unravel deals before the CFIUS findings get to the White House.
Broadcom argued Friday that it was committed to building on the San Diego company’s record. It also noted that Qualcomm is facing scrutiny from regulators around the world about what some say are anticompetitive licensing agreements that the company uses to fund its R&D investments.
“There is no truth to Qualcomm’s argument that its anticompetitive licensing practices are needed to fund a robust R&D effort. None of the industry’s other great innovators violate the law in order to finance their R&D,” Tan wrote.
A Qualcomm spokeswoman was not immediately available for comment.