Broadcom pitches to make the U.S. the global leader in 5G for Qualcomm
Directly related to its offer to acquire Qualcomm Incorporated, Broadcom Broadcom will create a new $1.5 billion fund with a focus on innovation to train and educate the next generation of engineers in the U.S.
Broadcom is claiming that it is basically an American company, saying that it is in the final stages of redomiciling to the United States – a process will be complete no later than May 6, 2018. If the acquisition of Qualcomm is completed, Broadcom expects to have more than 25,000 employees in the U.S.
This follows the secret filing by Qualcomm with the CFIUS (Committee on Foreign Investment in the U.S.) to initiate an investigation, resulting in a delay of Qualcomm’s annual meeting where shareholders were to vote for new directors to the board. It is also an attempt to get the government with a protectionist agenda on its side to prevent the takeover.
According to Broadcom this was a blatant, desperate act by Qualcomm to entrench its incumbent board of directors and prevent its own stockholders from voting for Broadcom’s independent director nominees.
The SEC has cleared Broadcom’s preliminary proxy statement, and Broadcom continues to expect to receive all requisite approvals to complete the process by the end of its fiscal second quarter ending May 6, 2018. Broadcom continues to pursue the redomiciliation process as expeditiously as possible. Upon completion of the redomiciliation, Broadcom’s proposed acquisition of Qualcomm will not be a CFIUS covered transaction.
Next: The rise of protectionism.
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However, as the President Trump seems bent on a protectionist approach to the rest of world, it remains to be seen what other countries, especially China, make of any attempt of others to dominate 5G technology. This is especially pertinent in light of Qualcomm’s anticompetitive licensing practices claimed by other countries and companies, incuding China and Apple.
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Any impediments to markets and innovation with respect to 5G would be unfortunate as the technology would benefit from global co-operation in delivering a standards based high-speed wireless network that could enable seamless communications everywhere.
See also: Qualcomm pushes back on Apple’s lawsuits in China
In a hint to making life more complicated for Qualcomm, Broadcom says it will fund enhanced R&D through lawful business practices rather than predatory and anticompetitive behaviour. Further, Broadcom states that there is no truth to Qualcomm’s argument that its anticompetitive licensing practices are needed to fund a robust R&D effort.
See also: Qualcomm to appeal billion Euro modem chip fine from the European Commission
Broadcom also says it acquires companies to focus resources and strengthen leadership in their core franchises. In the case of Qualcomm, this will be 5G cellular.
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