Rep. Duncan Hunter, R-Calif., on Friday released a letter he sent to the White House urging the government to conduct a national security review of Broadcom Ltd.'s (AVGO) - Get Broadcom Inc. Report $79 a share hostile bid to acquire Qualcomm (QCOM) - Get Qualcomm Inc Report , if a deal between the two chipmakers emerges.
"Mr. President, should a deal materialize, I request that you block this sale pending a full security review and investigation," Hunter said in a letter to President Trump. "The growing Chinese connection by Broadcom creates the opportunity for China's security agencies to access and utilize Qualcomm's technology in defense-critical situations."
So far no deal is pending and Qualcomm has rebuffed Broadcom for months. Most recently, Broadcom lowered its bid to buy Qualcomm to $79 a share after Qualcomm hiked its bid to acquire another semiconductor company, NXP Semiconductors, to $127.50 a share.
However, Broadcom, which provides chips and technology for smart phones, is seeking to take over a majority of Qualcomm's board at the chipmaker's annual meeting set for March 6. If successful, expect the two companies to agree to combine shortly thereafter.
If a deal is consummated, Hunter is hoping that the U.S. Committee on Foreign Investments in the U.S., a national security review panel charged with examining cross-border deals for national security implications, reviews the transaction.
Hunter pointed to the CFIUS review of Broadcom's $5.9 billion acquisition of networking equipment maker Brocade Communications Systems. Broadcom agreed to sell Brocade's data center business for $55 million to Extreme Networks Inc. (EXTR) - Get Extreme Networks, Inc. Report .
In addition, Hunter said he took issue with Broadcom's "expanding strategic collaborations" in China involving memorandums of understanding with Chinese companies HBC, Inspur and StarTimes. "This growing Chinese connection by Broadcom creates the opportunity for China's security agencies to access and utilize Qualcomm's technology in defense-critical situations," he said.
Broadcom CEO Hock Tan said in November that he was moving the legal headquarters of the company back to the U.S. The company had reportedly reincorporated in Singapore for tax reasons.
Trump made limitations on trade and dealmaking a cornerstone of his campaign. As a result, Chinese buyers or companies with ties to China have faced harsher CFIUS reviews in recent months.
Hunter, who represents San Diego, adding in a tweet that the deal could result in the loss of "thousands of jobs" in San Diego, where Qualcomm is headquartered. He notes that "the thousands of Americans who compromise the Qualcomm creative team could lose their jobs or be moved off-shore, which would be a major loss for our nation."
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