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Broadcom hopes a $1.5-billion pledge will ease national security concerns over Qualcomm deal

Broadcom hopes a $1.5-billion pledge will ease national security concerns over Qualcomm deal
Broadcom is proposing a new fund that would focus on innovation to train and educate the next generation of engineers in the U.S. (John G. Mabanglo /EPA-EFE/REX/Shutterstock)

Broadcom Ltd. said it plans to create a new $1.5-billion fund to ensure America’s lead in future wireless technology, responding to U.S. government concerns that the chip maker’s proposed takeover of Qualcomm Inc. could hurt its competitiveness and threaten national security.

The Committee on Foreign Investment in the United States, led by the Treasury, is investigating the $117-billion offer by Broadcom on national security grounds, an unusual move that threatens to derail what would be the largest-ever semiconductor merger.

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In a letter explaining the grounds for investigation, the Treasury cited San Diego-based Qualcomm’s “unmatched expertise and research and development expenditure,” which drives its ability to set standards for the next generation of wireless technology known as 5G. The Treasury noted that a Broadcom takeover could reduce long-term investment to focus on short-term profitability.

In a statement Wednesday, Broadcom said, “With its proven track record of investing in and growing core franchises, Broadcom is committed to making the U.S. the global leader in 5G.”

The new fund Broadcom is proposing would focus on innovation to train and educate the next generation of engineers in the U.S., ensuring America’s lead in future wireless technology, it said.

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

“Broadcom will fund enhanced R&D through lawful business practices rather than predatory and anticompetitive behavior,” the statement said. “There is no truth to Qualcomm’s argument that its anticompetitive licensing practices are needed to fund a robust R&D effort.”

Singapore-based Broadcom also reiterated that it plans to shift its headquarters to the U.S. no later than May 6, a move it has argued should make it not subject to a review on national security concerns. If it achieves its goal of acquiring Qualcomm, Broadcom said it expects to have more than 25,000 employees in the United States.

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