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Qualcomm delays shareholder meeting after USA security review order

Qualcomm delays shareholder meeting after USA security review order

DEPARTMENT OF THE TREASURY WASHINGTON, D.C. March 5, 2018 Mark Plotkin Covington & Burling LLP One CityCenter 850 lOth Street, N.W. Washington, DC 20001 Theodore Kassinger O'Melveny & Myers LLP 1625 Eye Street, N.W. Washington, DC 20006 Re: CFIUS Case 18-036: Broadcom Limited (Singapore)/Qualcomm Incorporated Dear Mr. Plotkin and Mr. Kassinger: On January 29, 2018, Qualcomm Incorporated ("Qualconnm") filed a unilateral notice with the Committee on Foreign Investment in the United States ("CF, IUS"), seeking review ofBroadcom. Qualcomm's opposition to the deal has diminished, but the company claims Broadcom's offer is still too low.

However, Broadcom is not a Chinese company.

Broadcom is now based in Singapore, but is in the process of moving its headquarters to the U.S. Broadcom has its Americas headquarters in San Jose, Calif. Qualcomm is headquartered in San Diego.

Such a move could hurt the United States effort to develop 5G wireless technology because of the small number of suppliers that build the hardware. Harm to Qualcomm's innovation would allow China to expand its influence in key wireless technology, the government said.

The Treasury Department's concern is both over national security issues and a fear China would be able to gain a strategic advantage in future 5G networks development.

Authorize CFIUS to exempt certain otherwise-covered transactions if all foreign investors are from a country that meets certain criteria, such as being a US treaty ally and having a mutual investment security arrangement. But the Treasury Department expects Broadcom to scale back on long-term investment, including in R&D, if the acquisition goes through.

Canyon Bridge Capital Partners LLC, a USA -based private equity firm funded by the Chinese government, saw its $1.3 billion acquisition of US chipmaker Lattice Semiconductor Corp collapse a year ago after it was blocked by CFIUS, a rejection subsequently upheld by Trump.

Qualcomm shareholders were set to vote on whether to hand control of the San Diego cellular technology company to Broadcom on Tuesday morning.

Mr Cornyn said on Monday he was glad CFIUS chose to review the deal, noting aggression by " rivals, like China".

The deal was expected to face tough scrutiny from competition regulators.

"CFIUS is going to review any foreign acquisition of Qualcomm", Waite said. Bloomberg reported that Broadcom's slate of board of director candidates was expected to be elected at the meeting.

Broadcom, which is the fourth-largest company in the global semiconductor industry, tried to take over Qualcomm, the third-largest, for more than four months.

"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", Broadcom said in a statement.

The risks of the potential deal "warrant a full investigation". Miner Rio Tinto Plc asked CFIUS for a review in 2008 after facing a hostile $150 billion bid by BHP Billiton Ltd, according to a source familiar with the matter.

Broadcom struggled to win CFIUS approval to buy Brocade Communications Systems late a year ago.

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