Meet CFIUS, the group that could stop Broadcom from buying Qualcomm


Broadcom’s attempted hostile takeover of Qualcomm hit a major snag this week with the involvement of an obscure government agency that’s been described by one JPMorgan Chase executive as “the ultimate regulatory bazooka.”

That group is called the Committee for Foreign Investment in the United States, or CFIUS. In a letter dated Monday, the group called for a delay of Qualcomm’s annual shareholder meeting, scheduled for Tuesday, because the potential merger between Singapore-based Broadcom and San Diego-based Qualcomm “could pose a risk to the national security of the United States.”

But what is CFIUS and who’s involved with it? What sort of powers does it have to stop a merger of Qualcomm and Broadcom?

Here is what is known about CFIUS.

Who is behind CFIUS?

CFIUS is an inter-agency committee made up of members of several Cabinet departments including treasury, justice, homeland security, commerce, defense, state, energy, the Office of the U.S. Trade Representative, and the Office of Science & Technology Policy.

Members from the Office of Management and Budget, Council of Economic Advisors, National Security Council, National Economic Council, and the Homeland Security Council can also participate in its activities.

Treasury secretary Steven Mnuchin is at the helm of CFIUS.

How do you pronounce it?


What does it do?

CFIUS has the power to “review transactions that could result in control of a U.S. business by a foreign person, in order to determine the effect of such transactions on the national security of the United States.”

Broadcom Communications is a Singapore-based company and three San Diego-area members of Congress — two Democrats and one Republican — have raised concerns over the company’s ties to China.

CFIUS echoed some of those concerns in its letter.

If it’s a government agency, why is it so secretive?

Because CFIUS has oversight over deals that may involve sensitive information from major companies, it does not disclose things to the public, according to The New York Times.

President Gerald Ford established CFIUS in 1975 to study foreign investments in U.S. companies, and its powers were later expanded in 1980 when a Japanese company tried to acquire a steel producer in the U.S., according to a Congressional Research Service report.

Can it stop a merger between Qualcomm and Broadcom?

At the heart of CFIUS review are Qualcomm’s chips, which can process data from some of the fastest wireless networks, known as 5G. CFIUS will be looking into whether Broadcom’s acquisition of this technology could pose a national security risk. It does have the power to kill the deal altogether.

Whether it will do that is an open question.

Hernan Cristerna, global mergers and acquisitions executive at JPMorgan Chase, called it the “the No. 1 weapon in the Trump administration’s protectionist arsenal, the ultimate regulatory bazooka.”

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