Concern Over China Influence Shadows Chip Sector Deal

Concern over China's potential influence, and rising US protectionist sentiment, hangs over an effort by California-based Qualcomm to repel a Singaporean firm's hostile takeover bid.

If finalized, a tie-up between Broadcom and Qualcomm would be worth an estimated $117 billion and potentially the biggest-ever deal in the tech sector.

But Qualcomm rejected multiple Broadcom offers during weeks of parries and thrusts between the two firms since the proposed deal emerged in November.

In the latest move, Qualcomm, which makes most of the world's microprocessors for smartphones, postponed until April 5 an annual shareholders' meeting set for this week after secretly requesting a national security review of Broadcom's bid.

Shareholders were to vote whether to replace six of the firm's 11 board members with candidates backed by Broadcom, essentially endorsing the merger.

The Committee on Foreign Investment (CFIUS) ordered Qualcomm to delay its shareholders' meeting for 30 days to allow time to fully investigate the proposed acquisition, according to the US Treasury Department.

The Committee can review any acquisition by a foreign corporation of a US firm that may impair national security, and can recommend the president block a deal.

CFIUS has stopped some transactions but foreign companies often withdraw once it appears a deal will be prohibited.

The Committee noted that a Broadcom-Qualcomm merger could weaken Qualcomm's leadership in the field. This would likely help Chinese competitors such as telecommunications firm Huawei, particularly in the emerging 5G blazing fast wireless internet, where a stronger China could present a national security issue.

The head of Huawei last week defended his company following concerns its equipment could be used for spying, saying the firm had a "very strong track record regarding security."

Huawei reportedly