Broadcom hits back against United States government concerns with $1.5 billion R&D fund

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Broadcom, based in Singapore, has pledged to move its headquarters to the US, which it believes would remove CFIUS jurisdiction.

Mir noted that Chinese companies such as Huawei, which is also the No. 3 smartphone maker, have increased their engagement in 5G's development and that Huawei owns about 10 percent of 5G essential patents. The committee said this could then lead to lower investment in R&D due to pressure to focus on profitability in the short-term.

Broadcom also took a swipe at Qualcomm's licensing business, which is a subject of dispute between the companies.

"This is a very serious matter for both Qualcomm and Broadcom", the San Diego company said in a statement.

Broadcom said Wednesday, however, that it would maintain research and development resources at Qualcomm and would focus spending on critical US technologies.

The letter was only made public by Qualcomm on Tuesday 6 March and is a rarity as the CFIUS rarely weighs in on deals it is examining. But it now appears willing to continue to pursue its bid for Qualcomm through the CFIUS review, said Bernstein Research Analyst Stacy Rasgon in a research note. While much of the CFIUS' national security concerns were not detailed in the letter due to their classified nature, the board did mention worries around Broadcom's "relationships with third party foreign entities and the national security effects of Broadcom's business intentions with respect to Qualcomm".

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Qualcomm also is a product supplier to the US government and is working with it on cybersecurity for the next generation of wireless, 5G and the Internet of Things, according to the letter.

In a statement Wednesday, Broadcom said, "with its proven track record of investing in and growing core franchises, Broadcom is committed to making the USA the global leader in 5G".

On Wednesday, Broadcom tried to assure regulators that it is emphasizing investments in research and development. "Limitation or cessation of supply of Qualcomm products or services to the United States government could have a detrimental impact on national security".

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.

Qualcomm's shares slipped 41 cents to $64.33, while Broadcom's were down $1.46 at $249.41.