Deals and IPOs

US says it has confirmed national security concerns over Broadcom-Qualcomm deal

Key Points
  • The Treasury's committee overseeing foreign transactions in the U.S. says Broadcom violated its previous orders by failing to notify it ahead of time of moves it was making to relocate to the U.S.
  • The government has said it was concerned a deal could hinder Qualcomm's competitive edge in mobile network development.
Appears CFIUS 'not happy' with  Broadcom, says CNBC's David Faber
Appears CFIUS 'not happy' with Broadcom, says CNBC's David Faber

The government has sent a warning to Broadcom about violations of an order it issued earlier this month in the chipmaker's ongoing attempt to buy Qualcomm.

The Treasury's Committee on Foreign Investment in the United States said Sunday it has confirmed the national security concerns it has raised about the deal and said it would consider further action, including referring the matter to President Donald Trump.

Broadcom is battling for board seats at Qualcomm, which has resisted its hostile takeover attempt. The government has said it is concerned about Qualcomm's ability to maintain a competitive edge over China in mobile network development, citing Broadcom's reputation for cutting research spending.

In response to that claim, Broadcom said earlier this month it is fully cooperating with CFIUS and was "absolutely committed" to making the combined company a leader in 5G technology, the next generation mobile network.

Sunday's letter to lawyers for the two chipmakers said Broadcom violated the government's previous order by making moves to relocate its headquarters to the United States from Singapore without giving CFIUS five days notice, as required. Broadcom made these moves three times, according to the letter, which was reported by CNBC's David Faber on Monday.

The investigation should be ending soon, the CNBC report said. If Broadcom moves its headquarters before the review is over, CFIUS could potentially lose its jurisdiction over the deal.

Broadcom officials are meeting with CFIUS on Monday to tell them why it should not refer the deal to the president to be blocked, CNBC reported.

Shares of Broadcom rose 2.9 percent on Monday, while shares of Qualcomm dipped slightly, down 0.9 percent.