Qualcomm continues to fight back against Broadcom’s hostile bid, with each day bringing a new set of developments. On Friday, Broadcom sent an open letter to Congress explaining why it doesn’t believe that the merger would threaten national security, while Qualcomm announced that it has shifted the board chairman position to an independent director.
In its letter to Congress, Broadcom pledged to “make the U.S. the global leader in 5G” technology. The chip maker argued against what it called “misconceptions” that the merger would cut funding for the development of 5G technology. It also highlighted its past investments in companies it has acquired in the past and said that if it is allowed to acquire Qualcomm, its investments would focus on 5G technology.
The company argued that Qualcomm itself is struggling with its own part in the development of 5G. For example, it stated that Qualcomm has been paying for its R&D work on 5G using “licensing revenue derived from predatory and anticompetitive practices that have put it at odds with customers and antitrust regulators around the world.”
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That line is undoubtedly a reference to the ongoing battle between Qualcomm and Apple. The two companies have been duking it out in court for quite some time, with the chip maker even attempting to get the iPhone X banned. Regulators in the European Union fined the chip maker earlier this year over a deal it struck with the iPhone maker for mobile chips.
In the letter to Congress released today, Broadcom also promised to work with the U.S. government in the development of 5G and create a $1.5 billion fund “with a focus on innovation to train and educate the next generation of RF engineers.” Additionally, the chip maker promised not to sell any “critical national security assets” to foreign companies.
Broadcom’s letter is just the latest episode in a hostile takeover saga that’s been going on for months, and it’s a response to Qualcomm’s move to seek protection from the Committee on Foreign Investment in the United States. CIFUS seemed to side with Qualcomm, saying that the merger could have a negative impact on its ability to compete and also on national security.
Chinese tech firm Huawei was seen as a potential beneficiary of the merger because CIFUS expressed concern that it might enable China to exert more influence over the process of setting standards for 5G technology. The committee ordered a delay in the shareholder vote over whether Broadcom’s board nominees would be elected to Qualcomm’s board. Treasury Secretary Steven Mnuchin also spoke out about the hostile takeover, telling CNBC’s Squawk Box that they are “prepared to use our powers to protect national security.”
Meanwhile, Qualcomm continues to take offensive action to fend off the hostile bid, and on Friday, it announced that Jeffrey Henderson is taking over as non-executive chairman of the board. Paul Jacobs, who was serving as executive chairman, will remain on the chip maker’s board of directors. Analysts see the move as an attempt to assert the board’s independence.